All is not what it seems for Qantas

Courtesy Qantas

Courtesy Qantas

IT was the biggest loss in Qantas’ history when the Australian flag carrier announced the loss of A$2.84 billion (US$2.66 billion) for the financial year ending June 30, 2014. And that, on the back of a transformation program that Qantas chief Alan Joyce insisted was working to steer the company back to profitability as the carrier plans to axe 5,000 jobs over the next three years.

Last year, the airline lost A$341 million, which only serves to amplify the magnitude of the latest results of a loss that is almost nine times worse.

Qantas blamed weak demand in Australia, subdued consumer and business confidence and higher fuel prices for its weak performance. Qantas Domestic’s profit fell drastically from A$365 million to A$30 million, facing stiff competition from Virgin Australia. Qantas International continued to lose money, losing A$497 million. Jetstar lost A$116 million, blaming “an unfavourable fuel cost of A$86 million, a yield decline of A$113 million across the highly competitive South East Asian and Australian markets and an increase in associate start-up losses of A$20 million.” Jetstar Japan took the lion share of the start-up losses, which totalled A$70 million.

Yet while Mr Joyce could not put a time frame on when Qantas might break even, he was optimistic. Announcing the results, he said, “There is no doubt today’s numbers are confronting, but they represent the year that is past.” But, of course, the future should hold a different story. Mr Joyce went on to say, “We have now come through the worst. With our accelerated Qantas transformation program, we are already emerging as a leaner, more focused and more sustainable Group.”

But the truth remained that Qantas did poorly and Mr Joyce’s hope of an improved financial performance going forward would most likely have to be achieved by cutting costs rather than making advances in the market. Besides cutting jobs, the airline would be cutting capacity. No new Jetstar ventures are anticipated. In other words, Qantas would shrink. All is not what it seems about its transformation.

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About Dingzi
Writer by passion, with professional expertise in aviation, customer service and creative writing. Aviation veteran, author, editor and management consultant. Besides commentary on business issues and life-interest topics, travel stories and book reviews, genres include fiction, poetry and plays. Nature lover who abhors cruelty of any form to animals, and a tireless traveler. Above all, a dreamer.

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