Why Qantas’ $2.8 billion loss isn’t such a scary number

first_imgOPINION | Two point eight billion dollars. The sheer size of Qantas’ reported loss is a number so large that it bears repeating, slowly. Two point eight billion dollars.It’s a jaw-droppingly big number. It’s quite possibly the largest loss ever posted by any airline airline anywhere in the world. And a seemingly bottomless black hole for an airline which only three years ago declared an annual profit of $552 million.But $2.8 billion is not the number that should be taken away from the airline’s recap of the 2013-2014 financial year.Yes, $2.8 billion was the Big Scary Number featured in every headline, the opener of every news bulletin and the start of every conversation yesterday about Qantas and by extension the performance and fate of CEO Alan Joyce, a man who probably feels like Australia’s favourite punching bag.But most of that number, and therefore most of the loss, isn’t real.$2.6 billion of it comes from a ‘write-down’ of the value of the aircraft belonging to Qantas’ international fleet – a devaluation intended to reflect their actual worth in today’s market, in the same way that your house might be devalued in a slump.And this $2.6 billion found its way onto the books only because of Qantas’ decision to effectively spin out its international arm into a new company – a move aimed at attracting foreign investment on the back of recent changes to the Qantas Sale Act.In short, that $2.6 billion is a paper loss. It doesn’t represent cash. It’s an accounting finesse. It’s a number in a column on an Excel spreadsheet.The real loss – what’s for obvious reasons called the underlying loss – turns out to be $646 million.That’s still the biggest loss in Qantas’ modern history since the airline was privatised almost two decades ago.And while $646 million remains a challenging number, it’s a far cry from $2.8 billion.Nobody is saying that turning around that $646 million loss, and getting the books to balance, will be easy.But Qantas is only partway through to run on its ambitious ‘transformation program’ charged with carving out a total $2 billion in savings. There are already signs that this wide-reaching program is paying its first dividends, with Qantas reporting $440 million in ‘transformation benefits’.The airline has in fact accelerated the scheme, beginning with front-loading the job-losses to shed around 2,200 staff positions by the end of June 2014 – almost half the target of 5,000 jobs to go over the next three financial years.The first five Boeing 787-9 Dreamliners earmarked for Qantas proved another casualty of a fast-tracked recovery, with purchase options on those fuel-efficient jets being pushed back another year.The gameplan is that these and other moves, combined with greater efficiencies in using the existing Qantas fleet – and a freeze in the domestic capacity war with Virgin Australia which proved so costly to both airlines – will right the ship.Joyce has made a brave but measured forecast that Qantas as a group – which includes the now loss-making Jetstar division – will return to an underlying pre-tax profit by the end of this year.There are ample caveats to this. Hitting  cost-saving targets, stable fuel costs, the repeal of the carbon tax and rising demand against stable capacity are all listed on Joyce’s Get Out Of Jail card.But there are signs that the rising tide of red ink has turned and Qantas is on the way back from the brink.David Flynn is the Editor of Australian Business Traveller Follow Australian Business Traveller on Twitterlast_img read more

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Suarez deserves no sympathy at all for his act, says S Kannan

first_imgLuis Suarez is a national hero, whatever he does. When he pumped in two goals against England at the FIFA World Cup, tears trickled down the cheeks of English fans. And now that the Uruguay star has shown his uglier side again, biting Italian Giorgio Chiellini on the shoulder with the delight of a canine, he is still being hailed as a hero at home.They say old habits die hard and, in the case of Suarez, this seems to hold true as his previous ‘bite victims’ Otman Bakkal and Branislav Ivanovic in 2010 and 2013 respectively will testify. Aggression in sport is something which comes naturally. The urge to win can make one do bizarre things as ‘Iron’ Mike Tyson would vouch for when he bit Evander Holyfield’s ear in a professional heavyweight bout in Las Vegas in 1997. In boxing, the urge to punch hard and cause damage to the opponent and win maximum points can be understood.But what causes Suarez to behave like this is hard to comprehend. In football, a rough tackle is a common occurrence, as is striking a player behind the knee to thwart his progress. Yet, the very thought of biting a player and then falling on the ground to show pain in the teeth is bizarre. All this happened in a matter of seconds and nobody knows what precipitated it.Was it a chase for the ball or frustration at not being able to stop Chiellini? Only Suarez can answer that.Luis Suarez is a serial offender who causes nuisance on the field. Mind you, all this was not spotted by referee Marco Rodriguez. It was only after the FIFA disciplinary panel met two days later did it decide to hand Suarez a ninematch ban and a fourmonth forced holiday from the beautiful game.advertisementAs a football fan, what is of utmost concern is how a star player can behave in such a sick manner. To bite in self-defence can be tolerated but not breaking all rules of discipline and sportsmanship and digging one’s teeth into an opponent’s flesh. In Britain, Suarez is now the butt of ridicule. From images of Suarez as ‘Jaws 4’ to shrinks giving their opinions, each one has his or her own take. Yet, the fact remains this is not the time to condemn a player just because he scored against one’s team.Suarez has to be condemned because his act borders on barbarism and could have actually instilled fear in Chiellini as the next time he is on the field in a club game, he may wonder if he’ll again be a victim of biting. Then again, not many would know that the human bite can be as dangerous as that of an animal that has been administered anti-rabies injections.Even as major sponsors like Adidas decide their future course of action with respect to Suarez, his fortunes in club football will take a nosedive. For millions who idolised the star, such acts can never be forgiven, unless you live in Uruguay. The way he has been received at home suggests fellow Uruguayans worship him even after his reckless act.In today’s age of satellite television, the FIFA World Cup is watched globally. Impressionable kids watching Suarez biting a player is a bad advertisement for the game. What’s funny is how Argentine superstar Diego Maradona has come out in defence of Suarez and criticised the ban. I think it’s understandable as Maradona is no role model. From his “Hand of God” act to drinking, doping and drug abuse episodes, each one has shown him as a weak character.So it’s clear Maradona is supporting a man who is guilty of not behaving like a normal human.ASIAN DEBACLEAway from the biting episode, what has come as a disappointment is the way Asian teams have flopped in Brazil. Iran, South Korea, Japan and Australia -none could progress to the Round of 16. It is well known that 60 per cent of the football market is in Asia and most of the funds are mopped up from here. So what is it that has resulted in Asian teams faring badly? If Asian Football Confederation president Sheikh Salman bin Ebrahim Al Khalifa is to be believed, copying European football had done the damage. Sheikh Salman says the shortcomings are clear and it is a wake-up call for the AFC. The same views have also been aired by Iran’s national coach Carlos Queiroz, a well-respected figure. The former Real Madrid coach says this setup will not work. “You cannot copy Europe because the day you think you are close, they are one step ahead because they also progress,” says Queiroz.advertisementForget what is happening in stronger football teams in Asia, look at India. More and more money is being pumped into the game, or so we are made to believe. The Dutch seem to have taken control of Indian football as from technical director Rob Baan to coach Wim Koevermans, they call the shots.The salaries they earn are mind-boggling and yet Indian football has crashed to abysmal depths. During the last FIFA World Cup India was ranked 142 and now it is 154! Obviously, what Queiroz is saying holds true for India as well. Having “professional” club football at home means nothing with top teams like Churchill Brothers, United SC, Rangdajied FC (Shillong) and Mohammedan Sporting now relegated from the ILeague as they do not fulfill AFC [email protected]last_img read more

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