Case Study: Qantas

Question 1

Operations: Cost leadership

Answer 1

Cut costs > $4B-AUD

Question 2

Operations: Eco. of scale

Answer 2

Top 10 largest airlines by size, one-world, waste min., tech.

Question 3

Operations: Gearing

Answer 3

~70% assets geared to Global Market

Question 4

Operations: New prod./serv. design&dev.

Answer 4

Jetstar ASIA/Pacific/Japan ~ Growth in Asian market

Question 5

Operations: Outsourcing

Answer 5

Swissport, saves labour, capital outlay, incr. flexibility. IT ops.

Question 6

Operations: Dependability

Answer 6

Pre-COVID; 85%, end of 2022; 70% <– flights on time % (dep./arriv.)

Question 7

Operations: Cost

Answer 7

aiming to reduce its cost base by > $1Bn/yr

Question 8

Marketing: Consumer law

Answer 8

Qantas fined $2M (2019) for misleading customers re refunds, Jetstar. Now publishes TRUE cost of fares, inc. hidden costs.

Question 9

Marketing: Ethics

Answer 9

Plans to cut 100m single-use plastics

Question 10

Marketing: Marketing obj.

Answer 10

Increase dom. to 100%, increase int. 77%. <– 2023 flight capacity

Question 11

Marketing: Imp. mon. controlling market. plan

Answer 11

intro. jetstar to compete w/ Virgin AUS + expanding into Asian market (50% of capacity is aimed @ Asia) + 35%+ airfares $ to match fuel $ re Ukraine war.

Question 12

Imp. mon. controlling market. plan

Answer 12

intro. jetstar to compete w/ Virgin AUS + expanding into Asian market (50% of capacity is aimed @ Asia) + 35%+ airfares $ to match fuel $ re Ukraine war.

Question 13

Interdep. w/ other KBFs

Answer 13

Qantas spends > $275M/yr on staff training (biggest expense) HR

Question 14

Sources of finance

Answer 14

Equity finance; retained profits, sale of assets, and shares (raised $2Bn-AUD through sale of shares).
- Debt finance; Between 2020-2022 raised $2.4 billion in additional debt in loads secured against wholly owned aircraft to raise cash to offset COVID’s impact

Question 15

Gov.

Answer 15

Jobseeker + The international aviation support package (1april-31oct2021) paid to subsidise the wages of international aviation employees

Question 16

Global market infl.

Answer 16

GFC; raising > $500M-AUD from investors

Question 17

Profita. ratios

Answer 17

NetProfit (2022); Neg20%, Profit (2019); Pos7.4% (neg30% in 2021)
Cost controls: cut costs; by $3.4 billion in the last 5 years, reducing its overall cost base by around 20% (through fuel hedging, fleet restruct., 18-mnth wage freeze etc)

Question 18

Working Cap. mmgt.

Answer 18

contrl. cur. assets/liabilit. + leasing airc. + sale/leaseback.

Question 19

Profitability

Answer 19

Qantas had losses of $1.8Bn-AUD in 2021 (Airlines profit is relatively poor, as it is both capital intensive, and highly competitive).