Forum Topics QAN QAN Selling

Pinned straw:

Added one year ago

I had seen this as an opportunistic purchase ahead of a bumper profit and continued strength in the margin. I still like the value in the business (7x LTM PE) but given the increased politicization of the company, I am cautious of a near-term re-rate. 

mikebrisy
Added one year ago

And on selling tickets for flights already cancelled, head of ACCC has just said they want to at least double the record fine of $125m paid by VW. So they are gunning for c.$300m in the High Court.

$QAN have also extended deadline for expiry of COVID flight credits.

Pressure on Govt. to increase competition is mounting and not going away.

Well done to everyone who sold this week.

Disc. Not held, never will.

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nerdag
Added one year ago

Long term, Qantas revenue is driven by domestic not international.

The short term bump in revenues has been predominantly driven by international, with domestic now approaching normal long term capacity, demand and costs. International has not yet approached normal, but is likely to do so in the next 2-3 years.

My expectation would be that overall revenues from both international and domestic in the next few years will decrease, given falling demand and return to normal capacity. Add on the capex, and it's the perfect time to sell.

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mikebrisy
Added one year ago

@TEPCapital Jayne Hrdlicka was going pretty hard at $QAN this morning on ABC RN Breakfast. Would have thought Virgin benefits from the cosy duopoly, but she seemed to have a strong conviction that keeping Qatar out and interntional prices up is bad for the tourism industry overall. The Captains of Tourism agree. Then, there's also Qatar's potential interest in taking a stake in Virgin Australia. (Hmmm..wonder if that had anything to do with Jayne's point of view?)

There seem to be a lot of stakeholders against $QAN and the Government on this one at the moment. They seem to have miscalculated in thinking it would all go away, quietly. (The spraying around of Chairman's Lounge passes to Labour family and friends can't be helping the optics of the cozy mates Club.)

Then, there is all that capex to come.

Nice work on the short term recovery play, but airines are definitely not for me. Even if Warren and Charlie ever have a go .... oh, yeah, forgot. That didn't turn out so well.

On balance, I think you might have timed it rather well.

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edgescape
Added one year ago

After hearing about the Capex bill for all those planes, the suspension of those dividends is starting to make sense. But it will make the retirees unhappy.

What I also don't get is why Qantas is reintroducing that buyback.

I'm a holder through the covid period but I may need to reassess.

8

edgescape
Added one year ago

Amazing that the share price is holding on despite the announced 24 hour strike in WA.

Must be that buyback as I can't see any reason to hold at least in the short term with lots of negative headlines possibly still to come.

7

Bear77
Added one year ago

I spent the past week in WA @edgescape - with no phone or internet coverage for much of it, hence zero content has been contributed to SM by me for over a week, and I noted that the Qantas pilot's strike on Wednesday was confined to only pilots working for Network Aviation, a Qantas subsidiary that operates in WA under the QantasLink banner, and the strike therefore only affected regional flights in and out of Perth, mostly between Perth and the mining towns in the north of the state.

It was the second week of their school holidays, so it was described by the ABC in a bit of a union-bashing article (obviously going for that balanced coverage angle as they are always described as left-leaning) as the union throwing travel between Perth and multiple regional communities into chaos and causing mining companies to scramble to secure alternative flights for the state's fly-in, fly-out workforce. Qantas said about half its regional flights were cancelled on Wednesday and that about 3,500 customers were booked on other flights.

We flew over and back on Jetstar (another subsidiary of Qantas) and were happy with the service and the fact that both flights left and arrived on-time, or slightly early in the case of the return journey to Adelaide - tailwinds. I am very aware that has not always been the experience with any of the Australian airlines in recent times.

I only ever hold airline stocks as short-term investments. They rarely make good long-term investments, as it's a very capital intensive industry - and every airline has massive capex requirements to keep their planes flying and replaced regularly with newer models plus their highest cost is aviation fuel over which they have little control. Like many other companies, airlines sometimes get sold down to rediculous levels where they can make sense to "invest" in a share price recovery, but I'd only ever do it over short periods of time, and I wasn't too interested when Alan Joyce was running Qantas - he's an absolute toad! Their Chairman, Richard Goyder is not much better; Goyder backed every decision Joyce made, including the illegal sacking of 1700 workers. And the $125 million that Joyce received in salary and entitlements (and bonuses) over the period that he was there. That's the first time I've come across a situation where a CEO does NOT earn their incentives due to the company losing money, but the incentives continue to accrue and are then paid out when he reports one good year and then leaves. He actually was paid every incentive he could possibly have "earned" during his time at Qantas - he just had to wait a bit longer to receive all the money. It's disgusting!

Further Reading: Richard Goyder urged by Qantas shareholder group to 'read the room' and resign | SBS News

Damien worked for Qantas for decades. His sacking was just ruled unlawful | SBS News

Alan Joyce's Qantas leadership: The defining moments as chief executive departs early | SBS News

Qantas court case: Consumer watchdog pushes for record $250 million fine | SBS News

The only airlines that consistently do well are those national airlines that are subsidised by their respective country's governments, and Qantas can NOT fall into that category because it would kill any hope of effective competition within Australian domestic air services in the future. Rex and Virgin would cry foul, and so they should. My point is that airlines don't generally provide superior TSRs for their shareholders over long periods of time and the main reasons for that are that it's a capital intensive industry and they face significant costs (like aviation fuel) that they have very little (or no) control over. It has also traditionally been a reasonably labour-intensive industry when you include all of the baggage handlers and ground crews as well as the pilots, flight crews, aviation mechanics and technicians (service crews), security staff, check-in staff, etc., and the more they automate those roles, the more strife they get into when their various systems fail, even for brief periods. It ain't easy! And not generally a good investment over decent periods of time, relative to the myriad of other superior alternatives out there.

11

edgescape
Added one year ago

My other theory on the Qantas buyback is that it will reduce equity and in the process artificially boost EPS and ROE.

Makes everything look good on paper versus a dividend. But as all pointed out it is the business fundamentals that counts more than the numbers.

Seems like the hits keep coming though so I doubt the buyback can stem the bleed for much longer. The unfortunate events in Israel don't help sentiment either.

I think it is just a watch and wait from here.

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