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Qantas hits back against those who call turnaround ‘luck’

September 15, 2015 Aviation, Headline News 2 Comments Print Print Email Email

egtmedia59Qantas has taken the rare step of officially refuting those who attribute its recent spectacular financial turnaround to good luck, or to favourable circumstances largely beyond the carrier’s control.

An editorial in the Sydney Morning Herald, saying a “great deal of luck” had helped Qantas, pointed out that Qantas had enjoyed a AUD 116 million boost from the removal of the carbon tax.

“But above all the profit surged thanks in large part to a halving of the oil price, which cut AUD 461 million straight from the airline’s fuel costs,” the Herald said.http://eventscrm.ttgasia.com/ttg2016/itcmchina/buyer/itcmbuyer.asp?code=GlobalTravelMedia

“The price has dropped another 30% since, meaning the next half-yearly result should look stronger still.”

Qantas wasn’t taking that aspersion lying down. The airline said many of its staff were surprised to read the editorial.

“The timing seemed strange, given our results were more than two weeks ago,” a Qantas statement said.

“And the analysis seemed built around a begrudging acknowledgement that while Qantas has turned around, it is surely more to do with good luck than good planning.

“No mention of any bad luck prior to that – like record fuel prices, or a glut of international capacity due to the high Australian dollar or large amounts of foreign capital flowing into our domestic rival. According to the SMH, that was much more about bad management.”

The rest of the Qantas statement is worth quoting, so this is Qantas speaking from here on:

Some quick facts:

A lower fuel price contributed AUD 461 million to our result. A big number, absolutely, but roughly half of the AUD 897 million delivered by the transformation program.

Not all airlines are benefiting from lower fuel. Some got their hedging wrong. Qantas wasn’t one of them. This may look like luck to people outside the industry, but it actually comes down to good management.

Qantas is not particularly exposed to short-to-medium term oil price spikes. Our fuel price is hedged for all of FY16 and will be, at worst, the same amount as it was in FY15.

Our depreciation bill was lower because we adjusted the carrying value of up to decade-old aircraft that were on our books for more than the cost of a new one, which in turn was due to the massive shifts in the Australian dollar. This is a form of luck called accounting.

We will admit luck in one area – our people.

Airlines are a service business. And the challenge for any service business going through the kind of deep and difficult changes that Qantas had to make is to keep your customers with you.

Our people didn’t just maintain customer satisfaction levels as we started transformation, they increased it to record levels. And that’s continuing. There is virtually no airline – and very few businesses – where that has ever happened.

Literally scores of people have to get hundreds of things right for an aircraft to depart and arrive safely and on time. In our view, no one does that better than the people at Qantas.

They are why Qantas has a bright future. And we’re very lucky to have them.

Written by Peter Needham

Currently there are "2 comments" on this Article:

  1. gnits says:

    …if luck is the case, then qantas should continue laying off workers…

  2. Bill McCall says:

    No question the Qantas ‘turnround’ is solely due to bean-counter magic. Take away depreciation, foreign exchange, carbon tax issues, fuel pricing and all thats left is the cry of “service” Try getting a beer at 3.a.m in a darkened aircraft without a trip to the galley! I was told ‘if you want another one come down and see us in the galley’. No thanks, it gets better with non-aussie, non egalitarian, foreign carriers. Brilliant management? Sure, if you’re talking to yourself!

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