M3 Topic 4 Financial Strategies - Qantas Case study

Question 1

how has Qantas managed there profit

Answer 1

Cost controls to cut its costs by over $7 billion in the last 14 years reducing its overall cost base by between 20-25%.

Question 2

What cost control strategies did Qantas use to manage profit (3)

Answer 2

Restructure management (5000 jobs lost 2014-2016)
Entered strategic alliance with Emirates
Lowered fuel consumption (launched a pilot app to improve fuel optimisation)

Question 3

How is Qantas, managing there working capital

Answer 3

Sale and lease back: 2016 Qantas sold Sydney Airport Terminal 3 for $185m and leased it back, freeing up cash to be used elsewhere

Question 4

How is Qantas managing their global finances through hedging

Answer 4

Hedging: Hedged 86% of its fuel needs for 2018 through the use of options contracts, in order to take advantage of any fall in the US exchange rate

Question 5

How is Qantas managing their global finances through exchange rates (2)

Answer 5

They generates about 38% of its revenue in other currencies (including about 14% in US dollars)

if the Us dollar appreciates more people will want to travel to Australia allowing Qantas to earn more revenue