RedQ firms as name for Qantas's new premium airline in Asia

[flee 5]

Do you guys think MH might be involved in just too many airlines?

 

You have MH, FY, MAS, RedQ and don't forget Tony's private jet biz that he said will involve MH. That is FIVE airlines.

Nothing wrong with that as long as all five airlines have their own unique business plans and do not cannibalise market share from one another. It must also be noted that pax can often use more than one type of airline, e.g. LCC for personal holidays and FSC for business travel.

 

How Qantas planned to make its Asian premium carrier viable

 

Qantas is due to give further details at its half-annual results this week on its objective to enter the intra-Asia premium market, which it first officially raised in Aug-2011. As Qantas continued to develop its strategy and released details, confusion still existed to the basic premise. With updates due this week, it is worthwhile to review the project and interim developments since the carrier was first announced.

 

Full article: http://www.centreforaviation.com/blogs/southern-contrails/how-qantas-planned-to-make-its-asian-premium-carrier-viable-68111

[KK Lee 5]

Nothing wrong with that as long as all five airlines have their own unique business plans and do not cannibalise market share from one another. It must also be noted that pax can often use more than one type of airline, e.g. LCC for personal holidays and FSC for business travel.

 

 

MH is not known for management excellence or competent to be competitive and profitable at the same time. If MH manage to keep all 4 or 5 airlines in black and growing, the CEO’s memoir will be among the best selling books for years and essential read for MBA students.

[JuliusWong 0]

MH is not known for management excellence or competent to be competitive and profitable at the same time. If MH manage to keep all 4 or 5 airlines in black and growing, the CEO’s memoir will be among the best selling books for years and essential read for MBA students.

The cow will fly if that happens....

[flee 5]

MH is not known for management excellence or competent to be competitive and profitable at the same time. If MH manage to keep all 4 or 5 airlines in black and growing, the CEO’s memoir will be among the best selling books for years and essential read for MBA students.

How can there be excellence if the govt. and politicians keeps interfering?

 

Maybe only a CEO like the ex-Petronas CEO can tell the govt. to back off and leave them alone to run the business professionally.

[KK Lee 5]

How can there be excellence if the govt. and politicians keeps interfering?

As the gomen and politicians are unlikely not to interfere, situation at MH is like 'old wine in new bottle'.

 

Maybe only a CEO like the ex-Petronas CEO can tell the govt. to back off and leave them alone to run the business professionally.

 

And that's why Tan Sri Hassan Marican is now ex-CEO and Petronas is running as PM wish. How many GLC's CEO have the gut or self-confidence to stand up to the PM or Ministers?

 

http://www.themalaysianinsider.com/business/article/ex-petronas-chief-to-helm-singapore-power-giant/

http://www.btimes.com.my/Current_News/BTIMES/articles/20120215235902/Article/

[Mohd Suhaimi Fariz 2]

[flee 5]

Joyce takes major blow as Qantas calls off premium carrier talks with MAS

 

QANTAS has broken off talks with loss-making Malaysia Airlines on establishing a premium carrier in Kuala Lumpur.

 

The Australian carrier said today the talks had broken down "due to the parties being unable to reach mutually agreeable commercial terms".

 

Qantas chief Alan Joyce said in a statement to the ASX that Asia remained a priority for the group and it continued to explore opportunities in the region, including joint ventures and alliances.

 

But he said the airline would only allocate minimal capital to such ventures - the so called "capital lite" model - because of economic uncertainty and the Qantas focus on disciplined financial management.

 

"Last year, Qantas announced a five-year plan to address the challenges facing the international business," Mr Joyce he said. "The transformation of Qantas's international business remains vital, with plans to return the (sector) to profitability in the short term on track.

 

"In the medium term, the Qantas flying businesses, both domestic and international, will exceed the cost of capital on a sustainable basis."

 

Malaysia Airlines has been heavily in the red and was described by its chairman recently as a company in crisis.

 

The airline lost 2.52 billion ringgit ($780 million) last year, largely due to soaring fuel costs. It is understood that the financial problems at Malaysia Airlines were a key issue behind the failure of the talks.

 

Qantas shares lost 1.2 per cent to $1.705 early today at the Australian Securities Exchange, underperforming a 0.4 per cent rise in the benchmark S&P/ASX 200 index.

 

The breakdown in talks is a major blow for Mr Joyce in his quest to stem losses at the airline's international flights business.

 

By establishing airlines offshore, Qantas hopes to lower its cost base and better tap rising regional demand. It has successfully launched offshore subsidiaries through low-cost offshoot Jetstar, including in Japan, but the possible establishment of a premium carrier was a key part of its strategy.

 

Mr Joyce said previously that setting up a new airline in Kuala Lumpur that could take market share off other airlines in the region, including Malaysian Airlines, was also going to be a complex task.

 

Qantas had also considered setting up a joint venture in Singapore but eventually ended up concentrating on Malaysia without giving reasons.

 

Thanks to the strength of Australia's booming resource-led economy, Qantas's domestic flights business is performing well, helping to keep the airline profitable and maintaining its status as one of the few investment-grade airlines in the world.

 

The international unit, however, lost over $200 million last financial year due to higher jet fuel costs and increasing competition, largely from state-backed Middle Eastern carriers.

 

The move to can the talks on a premium airline would be welcomed by unions, which had seen it as a threat to Australian jobs.

Qantas pilots urged Mr Joyce to concentrate on mainline international operations in the wake of the failed talks.

 

"Alan should realise that the grand expansion plan in Asia has fallen on fallow ground and we hope he now concentrates on the airline itself, to resurrect its fortunes rather than cede all the ground to his competitors," Australian and International Pilots Association vice-president Richard Woodward said.

 

Source: http://www.theaustralian.com.au/business/aviation/joyce-takes-major-blow-as-qantas-calls-off-premium-carrier-talks-with-mas/story-e6frg95x-1226294613401

[jani 0]

Nice.....

[alberttky 0]

I hope they still thinking about setting up in SIN.

[kandiah k 0]

History repeats itself, like always between MH and any foreign companies, guess its due to the cultural practices here LOL!!!

[KK Lee 5]

History repeats itself, like always between MH Proton and any foreign companies, guess its due to the cultural practices here LOL!!!

Edited March 9, 2012 by KK Lee

[KC Sim 2]

There are probably a whole basket of reasons why these talks faltered ...

 

1. Cultural divide ... the corporate culture in both Malaysia Airlines and Qantas are just far too different and through his own visits over the last few months, Alan Joyce probably got a whiff of what's to come if both parties sign on the dotted line.

2. Differing views on where this new airline should be heading ...

3. Lack of confidence in Malaysia Airlines' financial standing ... given that MH's management branded itself "an airline in crisis".

4. Conflict of interest ... this new airline (whether it is called Sapphire or RedQ) is going to also challenge Malaysia Airlines or its subsidiaries, not something MH would relish now that part of its profits will be repatriated to Australia if Qantas is a partner.

 

More questions remain unanswered : what was / were the deal-breaker(s)? what happened to all that love and admiration for Tony Fernandes? what will happen to Qantas plans to co-operate more with Malaysia Airlines as a result of MH's entry into oneworld (sponsored by Qantas)? what indeed is the fate of MH's entry into oneworld ... granted that Qantas/BA do not operate to KUL?

 

My personal take on this whole development is that Alan Joyce got cold feet after getting an education on how the folks at Malaysia Airlines operate, the situation with Malaysian politics, MH's true financial standing. He probably made the best decision in the last two years of his career by walking away while he could. With hindsight, this will likely turn out to be a blessing in disguise for Alan Joyce and Qantas. Bet you the unions have just let off a lot of fireworks like it is Australia Day.

 

One now wonders if Alan Joyce will renew his love with Tony Fernandes and establish something along the lines of Caterham Jet ... maybe name it KangarooHam Jet.

 

KC Sim

[Mike P 0]

What a shame! I guess MH is best adopted by other airlines!

[BC Tam 2]

One now wonders if Alan Joyce will renew his love with Tony Fernandes and establish something ...

That read in same light as news of T/S TF relocating himself outside Malaysia and possibility of the MH-AK alliance being dismantled ...... interesting times ahead

 

What a shame! I guess MH is best adopted by other airlines!

There has to be a willing adopter to start with

[KC Sim 2]

I marvel at how little corporate memory there is in an organisation such as Qantas. The failure to find "mutually agreeable commercial terms" is something that I am certain many have expected ... and was therefore not surprising. What is surprising is it took this long ... ironically, doing nothing about establishing an Asian subsidiary is probably the most that Alan Joyce has done for Qantas in recent times. Maybe, just for this and for saving Qantas from a potential bloodshed, he deserves another 71 percent pay rise next year.

 

Some years back ... perhaps someone more into history could be more precise about it ... Qantas mulled the idea of "acquiring a stake" or "merging" with Malaysia Airlines ... that was after Qantas and BA have already pulled out of KUL citing poor yield ... and after much deliberations, it was established that there were irreconciliable differences between both companies. That was not such a long time ago actually ... so it is truly surprising that Qantas even attempted this latest joint venture talk.

 

Back then, MAS was in far less dire situation financially ... right now, MAS really has to make real structural changes - and not just shifting the problem from the airline to its subsidiaries - and get itself back in shape and join oneworld. It must NOT be like Air India and Kingfisher whose alliance memberships have both been thrown off-course.

 

While I am beginning to like the new corporate identity of Malaysia Airlines a lot more ... I shudder at the thought of the airline flying around for years to come with three different liveries ... not to mention service items, stationeries, marketing collaterals etc. Any move to immediately remove old items and replace with the updated corporate identity is going to incur a huge cost - one which MAS could ill-afford at this time.

 

Glad that the sarong kebaya is being retained without change ... but the uniform for the fligh stewards really could do with the change. The present one really belong to some little corner of history ... that alone is one little improvement already.

 

KC Sim

Edited March 9, 2012 by KC Sim

[Ruiz Razy 1]

One must remember that it was QF that provided significant assistance in terms of training , inflight services n even aircraft when MH started in 1972 ! As such MH -QF do hv a common ground . Plus even BOAC did the same during Malayan airways n when MH started LHR OPS , it was initially joint effort with BOAC ( now BA) .

[Johan Z 0]

This joint-venture supposedly would use MH yet-to-be-delivered A330. With MH desperately needs new aircraft, I don't think MH will agree easily.

[V Wong 0]

I am no business person, but I too would get cold feet (all the way up to the tips of my hair) if I were to enter JV with a partner that has lost RM2.5b a year. The story is different if it is a take-over...

[flee 5]

This joint-venture supposedly would use MH yet-to-be-delivered A330. With MH desperately needs new aircraft, I don't think MH will agree easily.

I think RedQ's initial plans were to use the A320 - this was reported before it talked to MAS.

[penangkia 0]

But from what I read, Qantas only wants to invest as little as they can. since MAS needs money now why they want to do so?

Secondly, MH will shoulder almost all of the risk while Qantas can pull out easily since the planes are not theirs and the new employees might be employed by the new company, which might be registered under MH or somehow related to MH, so if MH gets nothing from it (in terms of investment while still have to take all the risk), why not do it itself?

[KC Sim 2]

I am certain it is not a case of Qantas not wanting to invest but wants to take profits ... after everything is considered, they probably realised that the sums don't add up.

 

Although the aircraft and staff / crew will most likely come from MAS, there must be some sort of formula that MAS is pushing for Qantas to accept ... a way of calculating how much Qantas should fork out. It could just be that Qantas found the formula to be unrealistic (and therefore too high a price for Qantas) or perhaps realised that the traffic / revenue / expenditure forecast do not make business sense. Qantas had previously ordered the A320 for deployment on the services of its Asia-based premium airline (aka RedQ ... which now sounds more like a road-kill).

 

Like I said before ... establishing a joint venture with Qantas to operate unprofitable regional and/or domestic routes is advantageous mostly to MAS which suddenly has a "partner" to shoulder losses. There are many ways for a parent company to load losses / expenses onto a subsidiary (by way of creative accounting). I am not suggesting that this has been done or is going to happen ... just that it opens up such a possibility. Qantas' statement concerning its decision to break off talks included a statement about "focus on disciplined financial management".

 

KC Sim

[Mike P 0]

I am certain it is not a case of Qantas not wanting to invest but wants to take profits ... after everything is considered, they probably realised that the sums don't add up.

 

Although the aircraft and staff / crew will most likely come from MAS, there must be some sort of formula that MAS is pushing for Qantas to accept ... a way of calculating how much Qantas should fork out. It could just be that Qantas found the formula to be unrealistic (and therefore too high a price for Qantas) or perhaps realised that the traffic / revenue / expenditure forecast do not make business sense. Qantas had previously ordered the A320 for deployment on the services of its Asia-based premium airline (aka RedQ ... which now sounds more like a road-kill).

 

Like I said before ... establishing a joint venture with Qantas to operate unprofitable regional and/or domestic routes is advantageous mostly to MAS which suddenly has a "partner" to shoulder losses. There are many ways for a parent company to load losses / expenses onto a subsidiary (by way of creative accounting). I am not suggesting that this has been done or is going to happen ... just that it opens up such a possibility. Qantas' statement concerning its decision to break off talks included a statement about "focus on disciplined financial management".

 

KC Sim

 

This is Malaysia styles... Many investors flee away from Malaysia due to unjust profit sharing as suggested by Malaysia. Too bad!

[flee 5]

I think one of the main problems with doing business with Malaysian govt. linked companies (GLCs) is the insistence that the Malaysians own the majority stake. This was a problem when Proton was negotiating with GM and VW. It may be the same with MAS.

 

If QF is still interested in a Malaysia hub for its RedQ, the door is now open for Tony Fernandes. Now, nobody can say that MAS was excluded if they decide to go with TF.

 

TF's operations with the A320 are also more in line with RedQ's plans. TF also does not mind settlling for minority stakes, as he has shown in AirAsia Japan and other ventures.

 

If QF is only using KUL to extract a better deal from SIN, then AJ would be getting another massive pay rise this year!

[Mike P 0]

Proton is the good example... failure and failure and eventually has to be bought over by Khazanah...

[flee 5]

OT: Reason why Khazanah had so many Proton shares was because Mitsubishi wanted to quit. So they sold their shares to Khazanah.