Qantas Case Study Examples By Syallbus Point Flashcards
(INFLUENCES) Qantas Sales Act
Regulates the privatisation of Qantas, ensuring it remained under Australian control
- Foreign ownership restricted to 49%
- Criticism that it led to decreased profits, harder to obtain funds
(PROCESSES) Qantas Debt Financing
- Relies on it for growth and fleet renewal (2024 - 4.1 billion)
- Unsecured loans are Qantas’ primary long term finance
(PROCESSES) Qantas Leasing
- Leasing used to maintain flexibility and manage costs = less expenses
- During pandemic, Qantas paused their aircraft leases, creating less costs and flexibility in comparison to competitors who owned the aircraft
(PROCESSES) Qantas Equity
- Ordinary Shares issued via ASX
- ## Used retained earnings to fund projects, such as fleet renewals (less cost, but limited amount)
(INFLUENCES) Sources of Funds
- Record profitability from 2015 - 2019 led to retained earnings to be reinvested
- Sold land for $800 million, improving balance sheet and selling shares for $2 billion
(INFLUENCES) Global Market Influences
2009 Global Crisis led to 88% profit fall = Led to cut capacity, cancel orders of assets, replace with Jetstar
(PROCESSES) Financial Ratios
Qantas’ recovery from COVID
NP = 2019 = 7% 2021 = -30% 2024 = 9%
ROOE = 2021 = -354% 2023 = 24000%
Gearing (D-E) = 2023 = 1069.2 2024 = 20.73
(STRATEGIES) Profit management - Cost controls
Reduced costs by $5 billion over 6 years
- Outsourcing, use of technology, restructuring of fleet (new planes use less fuel, cheaper)
- COVID (Stood down employees, postponed fleet replacement)
(STRATEGIES) Profit management - Revenue Controls
Targeting different markets with Jetstar (Japan, China)
Increasing airfares because of demand = Combat increase in fuel
Enhance marketing strategies, kiosks, advertising campaigns
(STRATEGIES) Global Market - Exchange Rates
Appreciation
- Lowers Qantas’ fuel, leasing, overseas expenditure
Depreciation
- opposite
(STRAT) Hedging
Qantas hedges 83% of fuel needs, protecting against increases in prices, helped offset increases because of Ukraine War
(ROLE) Liquidity
Qantas has a negative WC, has a standby facility of $1.6 billion to pay off creditors (safety net)
In 2020, improved liquidity by cutting capital expenditure, securing additional debt/equity finance
(ROLE) Profitability
Qantas’ profitability is impacted in various ways, such as flucutating variable costs like fuel and labour
(ROLE) Efficiency
Qantas introduced more efficient aircraft, technology, improved maintainence
(ROLE) Growth
Expanding on new routes, acquiring planes and increasing capacity
(ROLE) Solvency
Qantas used profits to reduce debt levels, improving stability
Low gearing helped against COVID
Can be affected by future plans such as fleet renewals (need to use debt financing to cover costs)
