Miss
Case Study Links: Financial Objectives
Qantas:
Global Market Influences: * Prior to the GFC Qantas benefited from strong global economic growth that increased demand for its services, resulting in a net profit of $970 million in 2008. The 2009 GFC caused rapid revenue decline, leading to an 88% fall in net profit. * Qantas quickly responded by cutting lying capacity, restricting, and deferring and cancelling orders for new planes. * The current global uncertainty of the economy affects Qantas by: * Lowering its equity value * Increasing the costs of borrowing * Lowering economic growth in most developed countries
Processes and Strategies of Finance:
Profitability:
* Profits in the airline industry are relatively low due to being: * highly capital intensive * extremely competitive in terms of price discounting strategies * High costing variables such as fuel and labour * Frequent unfavourable events such as terrorist attacks (2001), SARS (2004), the rising cost of fuel (2006) and the global financial crisis. * Increasing profitability in 2007 and 2008 was due to the success of Jetstar, the robust economic environment and cost savings culminating in a record net profit of $970 million in 2008.
Cost Controls: * Reduced costs by over 5 billion in the last 9 years, aims to reduce further billion in the next two years, and this has been achieved through: * The Outsourcing of business functions * Replacing Qantas with Jetstar on some international routes * Attempting to secure more competitive fuel costs through hedging. * Cutting flying capacity by halting growth and cutting back services * Cancelling orders for new planes worth 7.9 billion dollars during the GFC. * Freezing executive pay * Restructuring management/redundancies * Fuel Hedging * Fue Conservation
Revenue Controls: * The total revenue of Qantas grew by 8% in 2011, and strategies have been implemented
Qantas:
Global Market Influences: * Prior to the GFC Qantas benefited from strong global economic growth that increased demand for its services, resulting in a net profit of $970 million in 2008. The 2009 GFC caused rapid revenue decline, leading to an 88% fall in net profit. * Qantas quickly responded by cutting lying capacity, restricting, and deferring and cancelling orders for new planes. * The current global uncertainty of the economy affects Qantas by: * Lowering its equity value * Increasing the costs of borrowing * Lowering economic growth in most developed countries
Processes and Strategies of Finance:
Profitability:
* Profits in the airline industry are relatively low due to being: * highly capital intensive * extremely competitive in terms of price discounting strategies * High costing variables such as fuel and labour * Frequent unfavourable events such as terrorist attacks (2001), SARS (2004), the rising cost of fuel (2006) and the global financial crisis. * Increasing profitability in 2007 and 2008 was due to the success of Jetstar, the robust economic environment and cost savings culminating in a record net profit of $970 million in 2008.
Cost Controls: * Reduced costs by over 5 billion in the last 9 years, aims to reduce further billion in the next two years, and this has been achieved through: * The Outsourcing of business functions * Replacing Qantas with Jetstar on some international routes * Attempting to secure more competitive fuel costs through hedging. * Cutting flying capacity by halting growth and cutting back services * Cancelling orders for new planes worth 7.9 billion dollars during the GFC. * Freezing executive pay * Restructuring management/redundancies * Fuel Hedging * Fue Conservation
Revenue Controls: * The total revenue of Qantas grew by 8% in 2011, and strategies have been implemented
Links: * High costing variables such as fuel and labour * Frequent unfavourable events such as terrorist attacks (2001), SARS (2004), the rising cost of fuel (2006) and the global financial crisis