Tag: QAN

It’s not quite clear why Qantas shares rose strongly yesterday.

So Qantas shareholders had no dividend in the 2011 financial year, they have watched the share price fall 16% so far this calendar year, and now they will be told, if they can understand it, that CEO Alan Joyce received a 71% pay rise to $5 million.

Investors were left a bit surprised, and not that impressed, with Qantas’s announcements yesterday.

Qantas Airways has hacked into its overly ambitious expansion plans for the second time in three months as weak growth and high fuel cost carve a hole through the company’s operations.

Qantas shares hardly moved yesterday after the airline boosted its fuel surcharge for a 5th time this financial year to where the extra cost is more than some domestic and international routes to NZ.

Qantas Airways has finally joined rivals Virgin Blue, Air New Zealand in revealing a raft of cost-cutting measures including reducing capacity in response to rising fuel costs and the impact of natural disasters here and offshore.

Goldman Sachs said yesterday about the Qantas announcement:

Qantas posted a more than four-fold increase in first-half net profit in the December half, revealed plans to add more planes to its fleet and revamp its schedule to try and defend itself against a revitalised Virgin Blue, and once again forgot shareholders.

Does Qantas really want investors to follow it, or has it delusions of becoming a "growth" stock by not paying regular dividends and trying to finance its ambitious expansion program?

Investors shrugged off the lack of a final dividend from Qantas after the airline yesterday reported another tough year with a 5.7% fall in full-year net profit to $116 million.

Unlike the AMP and Wesfarmers, Qantas muddied the market yesterday, getting its guidance all mixed up and helping send the shares down by the largest amount in 10 months at one stage.

The arrogance of the British Airways management and its CEO, Willie Walsh, knows no limits.

It was hardly a ringing endorsement of the Qantas led marriage plans with British Airways; in fact it ended up as something of a thumbs down from local investors who have heard it all before.

Qantas has increased its full year profit by 44.1 per cent but says it is starting to feel the effect of higher fuel costs amid an uncertain economic outlook.

Qantas Group airline Jetstar will now stretch its name to Asia.

Qantas Airways (QAN) said it is entitled to compensation following the latest bout of delays in delivery of the B787 Dreamliner aircrafts.

Qantas (QAN) said on Tuesday it has reached an agreement with the Australian Licensed Aircraft Engineers Association (ALAEA).

Qantas said today the three-month delay of the 787 Dreamliner announced by Boeing would now see Jetstar not take delivery of its first B787 before May 2009.

Qantas shares fell below $5 for the first time since the Airline Partners Australia bid was launched more than a year ago on a downgrading by investment bank, Merrill Lynch, to a "sell' recommendation yesterday.

Qantas has joined the great international airline rush to snap up new passenger jets between now and 2017.

Without all the subprime fear and the crunching happening in financial markets, the Qantas result should have produced a flood of 'we told you sos' directed at the board and management of the airline, especially from a couple of fund managers who went out on a limb in their early opposition to the $11.1 billion buyout from the Macquarie Bank-led private equity mob.

Don't be surprised if there are some well-timed upgrades for Qantas about to emerge.

Qantas shares closed off a cent at $5.68 in yesterday's generally easier market as the investors took a breather and looked again at the airline.

Qantas's glittering run came to an end yesterday with the shares suffering their first fall in the seven days of trading since APA pulled its offer once and for all and the airline's board lost chairman, Margaret Jackson and director, James Packer.

At last some straight talking from Qantas management, shorn of most of the hyperbole of the past three years about threats and dangers to the company’s future.

Gone were the chicken little ‘the sky is falling’ alarms about costs, oil prices, foreign airlines, terrorism, SARS and you name it.

In their place we have what appears to have been the basis of a fairly rational, level-headed assessment of where the airline stood after the APA bid debacle and the now derisory $5.45 a share offer.

Instead of meeting the predictions of a rattled chairman in Margaret Jackson, who as late as this week was wondering when the share price would fall, the shares hit record levels.

After withstanding the sale of hundreds of millions of shares by hedge funds and other speculators (more than 750 million in almost three weeks), the QAN share price broke free this week, rising gently and then accelerating yesterday to its highest level ever on the back of the briefing by the airline’s management to major shareholders.

The shares jumped past the $5.45 of the APA offer to climb to $5.54 and close at $5.46, up 4 on 114 million shares.

That’s $5.54 price is actually higher than the first offer price of $5.60 from APA which was made before the final 15c a share dividend was struck.

APA took that dividend away (which could have cost them the bid) and cut the price to $5.45. The effective price yesterday based on yesterday’s close was $5.69.

That’s a firm rejection of the APA offer and the board and management’s active support of it.

It confirmed the opposition to the bid from the likes of Balanced Equity Management and the now departed head of UBS Asset Management. Their investors in Qantas are all a little richer now for the opposition, as is the Qantas management group, although not as rich as the pot of gold promised to them by the APA offer.

Yesterday’s briefing backed up the comments from CEO, Geoff Dixon this week to staff about the airline being in a ‘sweet spot’.

A 17 page presentation formed the basis of the ‘making up’ briefing with big shareholders in Sydney, many of whom had sold early and were now buying back in, forced to by the bid failure and their slow realisation that the airline’s share price was going to rise.

It was a rare burst of unvarnished commentary from the CEO which clearly confirmed the healthy state Qantas now finds itself in, and how close it came to being ‘stolen’ by the APA offer of $5.45 a share.

Think of the briefing yesterday in another way: think of it as the first major update from management for the members of the new APA dominated board, had that New York hedge fund not botched its acceptance of the offer.

That management group included CEO Dixon, his number two the airline’s Chief Financial Officer, Peter Gregg and other senior managers.

Think of Mr Dixon using the same briefing notes and presentation, as released yesterday, to tell APA just what a bargain they managed to snare and how much comfort the news would be to the banks which financed it.

In fact shareholders would be entitled to ask why wasn’t this document, or something like it, included in the Target statement in the APA bid?

As you will see below for instance the presentation reveals a review of the Frequent Flyer program has been going on since last year. That wasn’t highlighted in the statement and now it seems to be a big part of the revamp.

Of course minority shareholders who had held out against the offer, would not have been involved or probably informed of the detail in this update, had APA won.

Yesterday Dixon used the word “favourable,” rather than the phrase, ‘sweet spot’ to describe where the airline finds itself at the moment and into the immediate future.

“We think we can handle most of what’s coming at us,” he was quoted as telling analysts and investors in Sydney yesterday.

He said the airline is benefiting from rising ticket sales and a “strong” domestic and global economy and “these favourable conditions should last for the next 12 to 18 months”.

Analysts at UBS, Macquarie Bank, JP Morgan, Goldman Sachs JBWere and other leading firms have this week upgraded their ratings on Qantas shares to “buy” from “hold,” or are about to release new recommendations, probably later today after they assess yesterday’s briefing.

There was no mention of a new profit upgrade yesterday. Qantas has already increased its earnings forecast twice after the board endorsed the buyout, saying pre-tax profit may almost double to $1.23 billion in 2008, from $671 million earned in 2006.

Analysts said Dixon told the meeting Qantas didn’t see the need to upgrade its forecast for the current financial year to June.

Among the points made in the briefing were:

The Qantas board will consider returning capital to shareholders through a special dividend payment, a share buy-back or splitting the company (demerger was used in the graphic).

Analysts said there was no elaboration of what was probably the most important part of the meeting: more details of possible options after that long board meeting last Thursday which saw Ms Jackson announce her departure and that of Mr James Packer as a director. These will happen at the annual meeting in November. The briefing again emphasised that the APA plans for Qantas would be followed.

APA had planned to increase Qantas’ debt to return $4 billion to shareholders within a year of taking control; Mr Dixon was reported as using a figure of $3.5 billion earlier this week and Merrill Lynch says it could be $2.2 billion.

Demerger could mean splitting off the freight business, Jetstar or selling the frequent flyer program, all of which were mentioned in the briefing presentation notes.

Qantas said it was “reviewing” the ownership of the 4.9 member loyalty program.

That could actually be revamped and returned

It hasn’t taken long but the Qantas board and management are up to their old tricks again, telling people other than the shareholders things about the airline when they should be trying to be as transparent as possible.