http://www.businessspectator.com.au/bs.nsf/Article/Qantas-pd20110217-E693Y?OpenDocument&src=hp6 Qantas chief Alan Joyce says its low-cost carrier, Jetstar, is worth $3.5 billion alone, and the market places a negative valuation on the national carrier's domestic and international business. Speaking to Business Spectator, Mr Joyce values the company's Frequent Flyer business at $2 billion, and its freight business $1 billion - combined with Jetstar, the three units are valued higher than the company's market capitalisation of $5.7 billion. Questioned on whether Qantas would one day float the Jetstar or Frequent Flyer units, which both produced record earnings in the first half, Mr Joyce said the global financial crisis had demonstrated the benefits of having them within the group. "We believe that the stability of earnings is a real strategic advantage for us and we need to keep it," Mr Joyce told Alan Kohler, Robert Gottliebsen and Stephen Bartholomeusz in a KGB Interrogation. "But what it does do is give us a challenge to go out there to the market to explain that the sum of the parts within the Qantas group is worth more than the market capitalisation of the whole." The one-time Jetstar chief also struck a positive note on Qantas's international business, which is facing increased competition from Middle Eastern carriers and Virgin, saying Qantas has a history of fending off challengers. " ... I'm absolutely convinced that we will come out with a whole series of solutions and ideas, and the same way we repaired the domestic market, that we'll turn this business around, and the board and management are very confident of that," Mr Joyce said
What?? I’d think that with Jetstar’s profit being so good that’d actually inflate Qantas’ share price. Perhaps that’s what they want to do, rather than spin it off and have Qantas drop to the bottom.
Correct. You don't have to actually like JQ or wish to fly with them to understand their value to the group.
As much as I hate LCC's, I use 3K regularly out of SIN (to MNL). It's hard to beat a SGD$200 fare from SIN-MNL when the next best thing is PAL (more expensive) or SQ (outrageous). Ok, so you get nothing on board, but nothing my laptop cant handle and I take what I want to eat on board (even though they say you're not allowed to). They're flying new Airbus aircraft and most of the pilots are Aussie, so there is some comfort that they know which way to turn once airborne.
I'm surprised that SQ can't match well on this sector, although I guess it is the only full cost carrier that services it (with PR codeshares). I really wonder how successful 3K and the other Jetstar variants are in Asia. It behooves me that what we perceive in Australia that could be pretty awful treatment (more or less like farming cattle) could be profitable in Asia (which was pretty saturated even before Jetstar arrived). Let alone how successful 3K would be servicing a rather stolid Singaporean market, which I thought would've had more standards than the average Australian (and wouldn't think of flying 3K...)
In more direct response to the topic, sure, Qantas will pull through.... Just like British Airways somehow survived under Bob Ayling, and JAL somehow managed to claw itself back from the dead into an albeit hapless but alive shadow of its former grandeur.... Unlike those two examples, Qantas does not have a 'weak' rival in the Virgin group of Australia (cf. BA and BD), nor does it have government regulation on its side (cf. JL and NH)
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