The question now is whether the NAB narrative is understood.
Mr Clyne believes it is, but admits investors are tough critics who are keen for answers.
"We outlined our strategic view and what's critical to us is that we consistently deliver against that," Mr Clyne said.
The passenger figures Qantas released to the stock exchange yesterday weren't flash - but the unannounced financial reality was much, much worse.
While Qantas told the ASX its May Qantas International and Jetstar International revenue seat factors were up 4 and 4.8 percentage points respectively, it didn't say that its yield on the combined international business had collapsed by 25 per cent.
Businesses – The Great, the Good and the Gruesome
Let’s take a look at what kind of businesses turn us on. And while we’re at it, let’s also discuss what we wish to avoid.
Charlie and I look for companies that have a) a business we understand; b) favorable long-term economics; c) able and trustworthy management; and d) a sensible price tag. We like to buy the whole business or, if management is our partner, at least 80%. When control-type purchases of quality aren’t available, though, we are also happy to simply buy small portions of great businesses by way of stockmarket purchases. It’s better to have a part interest in the Hope Diamond than to own all of a rhinestone.
A truly great business must have an enduring “moat” that protects excellent returns on invested capital. The dynamics of capitalism guarantee that competitors will repeatedly assault any business
“castle” that is earning high returns. Therefore a formidable barrier such as a company’s being the lowcost producer (GEICO, Costco) or possessing a powerful world-wide brand (Coca-Cola, Gillette, American Express) is essential for sustained success. Business history is filled with “Roman Candles,” companies
whose moats proved illusory and were soon crossed.
TPI's recent strategy has been driven by acquisitions. At the end of this year TPI have to refinance about $2.7bn of debt. Given recent events in the credit market, this could prove interesting. More from Adele Ferguson here. Key quote that backs up what we keep discussing in class:The ride has been exciting, with the share price going on a roller-coaster ride, and profits going through the roof. But analysing a company that makes a lot of acquisitions is tough, particularly one that has reclassified some of its businesses into different divisions and created new divisions.
FOUR months after the Airport Rail Link was bought out of receivership by Westpac, fares on the already costly service will rise by as much as $2.As best I can tell, that's a really really dumb strategy. [Mind you, the airport link should have incorporated the SCG, Fox Studios, UNSW, then down to the airport. Or at least have dedicated trains starting at the airport, so that passengers with their luggage can actually get on the train, and put their bags in a dedicated bag 'area'. Sheesh]Despite speculation fares would fall after the buyout to entice more passengers, ticket prices will climb next Monday by between 20 cents and $1.30 for tickets from the city to Mascot and Green Square, and by up to $2 to the airport.
Speculation that Qantas will announce a significant change of corporate strategy at their upcoming annual general meeting. I'm sure this will be followed by claims that they are simply responding to the strategy that was proposed by the private equity team that was bidding for Qantas. Note the competing interests of the capital and the product markets here. The capital market wants to know as much as possible about QAN's future plans and strategies, so that it can best guess at how QAN will perform going forward (i.e., so that they can price the equity and debt of QAN). On the other hand, QAN's competitors also get to see what the major player (in the domestic industry in any case) is planning. Competitors may need to adjust their own strategy in response. This is an example of the "proprietary" costs of disclosure - you are giving away (potentially) valuable information to your competitors.
