Qantas chief says shareholders ‘better off in the bank’
Qantas posted an underlying before-tax profit of more than $550 million, which is up almost 50 per cent on last year. However, while half a billion dollars may sound like a lot of money, Qantas Chief executive Alan Joyce says the airline’s profit is well short of where it needs to be to justify the investment from its shareholders. Listen to the Podcast or Read the article.
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Ash Little
:
Hey Roger,
Doubling profits and the return is still less than a bank account.
Has this guy been listening to you Roger…..I think so.
A good rower in a leaky boat……..What a shame
Anthony
:
Hi Roger,
Re the idea of nationalisation. It is worthwhile remembering a few recent events. Firstly, the evacuation of Australians’ in Cairo. Secondly, the Papal flight from Sydney to Rome and thirdly the rescue of some certain solo sailor in Antarctic waters. All three events undertaken by Qantas in part because the Australian Airforce do not have the capability to complete such missions. The ultra long haul operations that are QF international are capital intensive and the return on capital invested is always going to fall short of the more advantaged (from an investment viewpoint) short haul operations. Nationalisation of QF, of course, is not going to be economic but political responsibilities and QF have stood side by side for 90 years, yet QF are left to shoulder the financial burden.
Finally, on the Asian expansion. Jetstar Asia after years of operation and significant start up investment managed to pull a $17million profit (FY10 report)….hardly eye opening. So my eyes are well and truly open wide when I hear QF want to spend $500 million more in Asia when the performance of the Jetstar Asia and Jetstar Pacific have been modest. Even more eye opening is that QF say they will return profit made in Asia back to Australia. Like I said, politics and QF operate side by side. To me it seems a risky strategy to try and improve the investment frailties both you and your bloggers have readily identified. Might I suggest an easier way would have been to cut the fuel bill in half and get 777’s. It’s never too late.
Roger Montgomery
:
And the nations passion for the airline, it’s history and it’s safety record all declined when it became clear it was just another company…
Jim
:
Hi Roger
2 points- first, a CEO that understands the basic tenet of being a shareholder.
Second, do you think our government would consider buying them back for political gain. It wouldn’t be for economic gain.
Cheers Jim
Roger Montgomery
:
There has been talk of nationalisation…not sure who started it.