kcaluwae

Stumbled upon this article today: http://www.news.com.au/finance/busin...-1226802711083

I was looking for a thread about this but found nothing.
The article doesn't offer much depth. It seems that this news pops-up once every so many months, at least that's what I understand from this article and I'm not really involved with Qantas to know anything else.

Globaliser

The most recent reiteration of / speculation about this came from the profit warning issued by QF a few weeks ago.

Blackcloud

AJ and the Board are focused on "unlocking value for the shareholders" I do not know how a partial sale woudl aciveve this as the shareprice is really independent of such a partial sale.
If QF sold its FFer a la AC then I would think that QF will end up like PA....just MHO. The QF program is a strength of QF and what is keepining many people flying them a reduction in that link will only weaken them in the end.

TravelingPeanut

http://www.ausbt.com.au/qantas-set-t...t-flyer-scheme

Will it be enough to get the airline out of the red or is it just the first step?

DownUnderFlyer

[mod hat] Merged two threads into one. [/mod hat]

Awesom Andy

Whether it's sold or not, points and miles are regularly devalued everywhere in the world. To expect something different here would be quite silly.

Blackcloud

Transfer of asset eg book value of QFF vs sale proceeds will give a one off profit or loss.
What they do with the cash is important. Will they invest it to help reduce the ongoing costs of QF, which will help provide long term sustainability. How will this effect the transfer of cost/revenue to the new majority owned entity.
Of cousre the most important thing for us is "What will it mean to QFFers benefits?"

number_6

The result with other FF plans that were spun off is well known (e.g. AC). Hardly surprising when you consider the buyers of the FF plan has a desire to grow revenue, and that in turn happens by selling more miles to credit cards etc. while decreasing costs (money paid to QF or other airlines to buy the airline awards being issued). The result is obvious, the only unknown is how fast and how far Of course QF can choose to add conditions on the sale, to maintain the viability of QFF as a QF marketing tool for a few years after the spinoff. And the buyers do want to keep the viability of QFF for the long term, just on a more profitable basis, so it has to be "competitive" with other FF plans on some basis (perhaps not earn/burn ratio as that isn't so important in marketing FF plans outside of FT).

RichardMEL

My opinion only, and as a (very small) QF shareholder is that selling this asset will give a big one off capital boost to the bottom line, and perhaps AJ & co may seek a small capital return to appease the shareholders who have suffered with a poor share price performance AND lack of dividend yield for some years now (sort of like Telstra has been borrowing to help maintain their dividend return to shareholders over the past few years as I understand it). Personally if (when?) they do spin it off yes it's very important where that huge cash injection goes - and it needs to be a medium-longer term investment to guarantee(as much as you can, anyway) returns to the airline. QF have had good cash savings in the past and it seems spent a lot on things that haven't worked out nearly as well as expected (eg: 380 over 777 impacted by inability to run more frequency on thinner routes vs plugging big capacity on core routes while facing competition from better equipped and backed competition).

I'm not too worried about my QFF points to be honest. I'm not even worried about my QF shares really as they're only slightly above useless at the moment and only a tiny part of my overall portfolio (but seeing the ~$1.10 current price vs the $6 offered just a few short years ago is something that stings a bit.. but more because I didn't get out when I had the chance to exit with a reasonable level of profit).

wallaby

Which will probably also give a big capital boost to AJ's bottom line.

patrickk

...retire 747s faster try to get a couple more A388s (which are a much better proposition than 777s for the long QF routes (look at where EK puts its A388s); and bring on the 789s but there are limited delivery slots they are holding; so maybe some leased A333s to plug the gap.

SW7London

I agree re the 777s but do they need any more A388s? Where would they put them? Maybe increase frequency to HKG and LAX but would the additional cost of acquiring them offset the efficiencies gained by replacing the 744's? Would JNB or SCL have the demand and yield to support the extra costs of the 388s?

IMO better to reduce LHR frequencies to one per day(or none?) to increase HKG and maybe LAX services with the current fleet.

What they need to do now is to concentrate/spend capex on the A333 refurb(why aren't the aircraft returning from JQ getting the new seats now??) and exercising the options on the 789s.

QF should be able to finance the acquisition of the 789s with no issues - they could always be sold on to any number of carriers - not something easily done with the 388s(and would be reflected in the financing deal they will get for any additional 388s).

Longer term maybe they can convert some 789 options to 787-10, and leave the 6 newest 744s for SCL and JNB until either ETOPS rules are relaxed or until demand warrants the 388s.

My view is selling part the FF program for fleet renewal is a poor idea, you instantly reduce your profits and when your ready to renew again in 20 years you will be in the same situation with no FF program to sell - the underlying issues of QF not being able to generate sufficient capital for fleet renewal(and other investment) need to be addressed(ie high cost base - which will be improved as the 789s come online and with staff on older legacy contracts retiring etc)

What should they do with the proceeds of the FF program if they sell?

Do they have much debt(and that should all have been refinanced at very low rates over the last 3/4 years anyway)

Give it back to shareholders? That would be tantamount to saying "we have no idea how to invest the money in our poorly performing airline, here have some of it back and watch us continue to moan about competition while we die a slow death"

just my 2c!

FTcadence

Commonwealth Bank financial analyst Matt Crowe is urging Qantas not to sell off it Frequent Flyer loyalty program. While he's willing to admit that the sale could net the airline $1.5-2.5 billion, he argues that the long-term costs of the move would end up hurting the airline.

http://www.dailytelegraph.com.au/tra...-1227024576424

wallaby

"By selling Frequent Flyers, you’re giving another organisation the ability to market to your best customers,”

Well they've already done it once with Emirates, soooo....

FTcadence

It looks like Qantas' plans to possibly sell its FFP have been shelved.

http://www.ausbt.com.au/qantas-frequ...ll-off-shelved