|Bid||3.5000 x 0|
|Ask||3.5100 x 0|
|Day's Range||3.5000 - 3.7000|
|52 Week Range||2.0300 - 7.4600|
|Beta (5Y Monthly)||1.02|
|PE Ratio (TTM)||6.35|
|Earnings Date||Aug 20, 2020|
|Forward Dividend & Yield||0.26 (7.41%)|
|Ex-Dividend Date||Mar 02, 2020|
|1y Target Est||7.08|
Fareportal has joined the UATP Network and is the first OTA to issue UATP accounts. The partnership allows for reduced distribution costs using the airlines' own lower cost form of payment, UATP. Fareportal is active with live accounts.
(Bloomberg Opinion) -- What could possibly attract Bain Capital about an airline that hardly ever generates cash? Loyalty is almost certain to be the answer.Administrators for Virgin Australia Holdings Ltd. at Deloitte agreed to sell the second-ranked Australian airline to the private equity firm after it collapsed in April owing A$6.8 billion ($4.7 billion). In a sign of what a difficult path lies ahead of Bain, interest from 20 parties was ultimately whittled down to just two final bidders. Airlines, with their vast capital expenditures, weak competitive positions, and already-heavy debt loads, aren’t the most obvious places for private equity to invest. Most firms look for businesses that can consistently throw off cash before returning to market at an enhanced valuation a few years later.Virgin hardly fits that bill: The company has posted positive annual free cash flow just three times in two decades. It’s hard to see how a few years of business in the time of coronavirus is going to enhance its market value much. That’s particularly the case given that Qantas Airways Ltd., which spent much of the past decade demonstrating the power of its superior market share, has just strengthened its balance sheet through a capital raising.There is, however, one part of Virgin that’s perennially attractive to private equity — its Velocity frequent-flier program. It’s not unusual for airlines to be essentially loyalty programs with wings — Qantas’s is often the most profitable part of the business, and Air Canada’s spun-off program Aimia Inc. mostly traded at a higher multiple than its former parent until it was bought back a few years ago. Velocity has already been a winner for private equity. Affinity Equity Partners bought a 35% stake in the program in 2014 and sold it back last year at a A$2 billion valuation. That’s more than twice what it originally paid, and far more than the A$1.2 billion or so that the entire airline was worth before coronavirus struck, not to mention the zero value now put on Virgin Australia’s equity. The biggest challenge for Bain will be what to do with the main bit of the business — but that’s not an impossible task. While details haven’t been released of what a post-insolvency Virgin will look like, you’d expect the administration process to bring an end to many of the asset impairments and interest expenses that have weighed so heavily on earnings in recent years, giving an opportunity to spruce it up for selling back to the market. Australia’s stock investors are famous for buying dog-eared companies from private equity and repenting at their leisure.Bain has promised to “invest in and see closer integration” of the loyalty program and the core flying business, though it’s not clear that this amounts to a promise never to separate the two. Don’t be surprised if 18 months from now the next big IPO in Sydney is a seemingly-rejuvenated Virgin Australia, shorn of its lucrative loyalty program. Just don’t make the mistake of buying into it.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
U.S. private equity group Bain Capital said on Friday it has agreed with the administrator of Virgin Australia Holdings Ltd to buy Australia's second-biggest airline for an undisclosed sum, banking on an aviation industry recovery. Bain's bid was chosen over a rival offer from Cyrus Capital Partners and a recaptalisation proposal put forward by Virgin Australia bondholders, administrator Deloitte said. Deloitte said it was not yet possible to estimate the return to creditors and did not expect any return to shareholders.
Asian stocks posted their biggest drop in eight sessions, bonds rose and the U.S. dollar was firm on Thursday as surging U.S. coronavirus cases and an International Monetary Fund downgrade to economic projections knocked confidence in a recovery. MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.7%, Tokyo's Nikkei slumped 1.1% and Australia's ASX 200 tumbled 2.1%. U.S. stock futures declined 0.4%, suggesting Wednesday's Wall Street slide might have further to run.
Qantas Airways Ltd is axing at least 20% of its workforce and intends to raise up to A$1.9 billion ($1.3 billion) of equity under a sweeping cost-saving plan prompted by the coronavirus pandemic. The Australian airline also said on Thursday it will ground 100 aircraft for up to 12 months and retire its remaining Boeing Co 747 fleet immediately, six months ahead of schedule, given travel restrictions imposed by the global health crisis. "We have to position ourselves for several years when revenue will be much lower," Qantas Chief Executive Alan Joyce said of the three-year plan.
(Bloomberg Opinion) -- You might not have thought it three months ago, when the spread of Covid-19 forced Qantas Airways Ltd. to halt international flights and drove its shares to their biggest percentage drop in eight years. But a global pandemic could wind up being good news for the company.Australia’s dominant airline is now something close to a monopoly player. Virgin Australia Holdings Ltd., its erstwhile local rival, went into administration in April. While limited flights are still operating, it’s unlikely to offer aggressive competition until a rescuer comes along, and possibly some time after that. That’s a fortunate position to be in. For carriers around the world, domestic operations tend to do better than international ones, since competition is usually weaker while shorter distances offer productivity benefits. This advantage is accentuated by the coronavirus, which has more or less shut down cross-border aviation on a global basis.Few carriers have as impressive a redoubt as Qantas can boast in Australia. Just a handful of domestic markets are larger in terms of passenger traffic. Of those, only India and Japan have an airline on a par with Qantas in terms of dominance, and most have suffered far worse from the virus.The company’s position is likely to be further solidified by a A$1.9 billion ($1.3 billion) capital raising announced Thursday. If you think this is some sort of desperate rescue move, have a look at the slim discount — just 3.3% or so to the previous day’s share price, once you account for dilution from issuing new stock.The advantage for airlines in the current crisis is that while the industry’s fixed costs are famously high, a lot of them aren’t nearly as fixed as the term would suggest. About 60% goes toward fuel, route and landing fees, as well as maintenance and depreciation, which is only incurred to the extent that flights are actually operating. The A$8.2 billion that Qantas expects to save over the coming 12 months amounts to about half of typical annual costs. Only A$600 million of the total will come from the difficult business of restructuring, with most of the savings resulting from simple expedients like burning less fuel.The international business that will be most severely hit accounts for less than 20% of profit in a good year, despite making up nearly half of Qantas’s seat capacity. Resisting the temptation of unprofitable overseas expansion is a strategy we’ve long urged on Chief Executive Officer Alan Joyce.Idling its gas-guzzling, hard-to-fill A380s — another measure announced Thursday — is also long overdue. Qantas shareholders have a habit of welcoming fleet writedowns, like the charge of up to A$1.4 billion that will result from that decision. In both areas, the coronavirus is providing the perfect opportunity to do what Qantas should have been doing anyway.Getting through the coming years isn’t going to be a cakewalk. Australia still needs international flights, but capacity on that front is expected to be half of typical levels in the year through June 2022. Even so, the country stands a good chance of returning to something resembling normal domestic aviation traffic sooner than any other major airline market, with the possible exceptions of China and Japan. Unlike Asian rivals that have been raising cash to make it through the pandemic, such as Cathay Pacific Airways Ltd., Korea Air Lines Co., and Singapore Airlines Ltd., Qantas has a substantial domestic market to fall back on while cross-border aviation is in hibernation. And unlike its U.S. rivals, such as American Airlines Group Inc., Southwest Airlines Co., and United Airlines Holdings Inc., it faces neither fierce competition nor a profound disease burden at home.No airline would wish the coronavirus crisis on itself, but Qantas is better placed than most to ride out this epidemic. “Qantas never crashed,” as Dustin Hoffman’s character once said in “Rain Man.” That looks to be as true now as it was then.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Qantas plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs as Australia’s largest airline tries to survive the coronavirus pandemic.
(Bloomberg) -- The final bids for Virgin Australia Holdings Ltd. will show how much appetite private investors really have for an airline industry that’s been battered by the coronavirus pandemic.Private equity firms Bain Capital LP and Cyrus Capital Partners LP made final and binding offers for the airline on Monday, administrator Deloitte said in a statement. The Australian carrier collapsed in April under A$6.8 billion ($4.7 billion) of debt after the government declined to step in.Deloitte, which aims to secure a deal by the end of June, didn’t disclose the value of either proposal. It received interest in the airline from more than 20 suitors before most of them fell away.The auction of the second-largest airline in Australia, a market dominated by Qantas Airways Ltd., is a key moment for an industry facing more than $84 billion of losses worldwide this year because of Covid-19 and related travel restrictions. Until now, carriers have been kept on life support largely with state-backed loans and bailouts of at least $123 billion.Whoever wins the bid, Virgin Australia’s prospects are uncertain and business travel likely will be curtailed for years, said Warren Staples, a senior lecturer in management at RMIT University in Melbourne.“There might be a gap between what they pitch and the reality of what happens,” Staples said.Deloitte said Cyrus and Bain envisaged operating a “smaller, single-branded domestic and short-haul international airline that also has growth potential.” Both bidders have received approval from Australia’s Foreign Investment Review Board, Deloitte said.Spokespeople for Cyrus and Bain declined to comment before Deloitte’s statement on Monday.Cyrus promised to keep the airline’s headquarters in Queensland, according to people familiar with the matter who declined to be identified because details of the bid haven’t been made public. That pledge followed lobbying by Australian states including New South Wales and Victoria for prospective buyers to relocate the business, which had about 10,000 workers before the pandemic struck.Virgin Australia lost money for seven consecutive years before it finally succumbed to a near-halt in revenue. New Managing Director Paul Scurrah’s plan to cut costs, simplify the fleet and lighten the debt burden was quickly overwhelmed by the outbreak. The government ultimately refused to give the airline even A$200 million to survive, so it joined U.K. carrier FlyBe as one of the corporate casualties of the virus.State AidIn Europe, Air France-KLM and Deutsche Lufthansa AG are among airlines that have accessed a mixture of loans and state aid, while major U.S. carriers have received billions of dollars in government assistance. In Hong Kong, Cathay Pacific Airways Ltd. this month announced a $5 billion rescue plan backed by the government.“It has potentially been a space in which state money has been more effective,” Staples said.A revival of domestic flights in the past month in key markets, including the U.S. and China, has encouraged investors. Qantas is reinstating some local services, and Australia and New Zealand -- which largely have suppressed their outbreaks -- are working on a trans-Tasman travel corridor.The early positive signs have propelled the Bloomberg World Airlines Index to a 28% increase from a May 15 low.Conditions are far from rosy, though. Australia’s tourism and trade minister, Simon Birmingham, said the country’s borders could remain closed to general tourism-related travel until 2021 as part of a strict containment strategy. Qantas has canceled most international flights until late October, and the pace of infections worldwide shows no sign of slowing.World Girds for Long, Hard Road Back After 450,000 Virus DeathsA buyout of Virgin Australia would represent a long-term bet on a sustainable recovery.Cyrus and Bain have courted Virgin Australia’s almost 10,000-strong workforce -- a key block of voting creditors -- through local media in recent days. Bain said its cuts to Virgin won’t be any deeper than Cyrus’, the Sydney Morning Herald reported. Some unions have backed Cyrus for its history of aviation investment beside Richard Branson’s Virgin Group, the newspaper said.Virgin Australia earlier attracted interest from Australian buyout firm BGH Capital Pty, Brookfield Asset Management Inc. of Canada and investors Indigo Partners LLC and Oaktree Capital Management LP.(Updates with two final bidders in the second paragraph, Cyrus plans for headquarters in the ninth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Poor communication between crew and load planners led a Qantas Airways (AX: QAN) passenger plane to take off above approved weight limit and spurred the airline to deploy hand-held scanning devices to automate most of the freight confirmation process, according to the results of an investigation by the Australian Transport Safety Bureau (ATSB).On Dec. 17, 2017, a Qantas A330-300 departed Sydney 1,047 pounds above the maximum takeoff weight, but the problem wasn't discovered until the plane landed in Beijing. The crew didn't report any control or performance problems, but continued operation of an aircraft that has exceeded its certified weight can lead to unaccounted structural damage and poses a safety risk.The ATSB, Australia's equivalent to the U.S.'s National Transportation Safety Board, determined that revised loading instructions to replace a 4,420-pound pallet with a lighter Unit Load Device because the plane took on extra fuel were not correctly understood by the load supervisor, who believed that the electronic message was supposed to be accompanied by verbal notice over radio or telephone. Using his tablet device connected to the freight management system, the ramp worker acknowledged the message from the load control office but didn't change the containers in the forward hold.Qantas has since formalized a procedure for verbal communication to accompany any changes in the load instruction.The incident highlights the importance of communication between all parties responsible for aircraft loading, especially in passenger operations that often are under significant time pressures and where delays can lead to scheduling issues, the ATSB report said. Prompted by the loading mistake, Qantas last June completed the replacement of iPads with hand-held scanning devices and printed bar codes that automate much of the freight confirmation process before loading onto an aircraft. (Click here for more FreightWaves stories by Eric Kulisch.)See more from Benzinga * Employee Headcount at US Class 1 Operations Tumbles 17% in May * How to Manage Supply Chain Volatility * More Severe Storms Could Hit Plains Through The Weekend (With Forecast Video)(C) 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Australia's competition regulator will monitor domestic airfares and profits for three years, increasing scrutiny as the industry begins a slow recovery from the coronavirus pandemic and Virgin Australia Holdings Ltd <VAH.AX> seeks a buyer. The federal government said on Friday the Australian Competition and Consumer Commission (ACCC) will monitor prices, costs and profits, as well as provide another avenue for complaints about anti-competitive conduct. "A key matter covered will be the level of capacity the airlines are putting on each route and whether this is occurring in a way that may damage competition," Treasurer Josh Frydenberg said in a statement.
UATP is pleased to enter a strategic partnership with Skål International USA effective immediately. The partnership will support their common goal of enriching the travel industry via available products and uniting the travel and tourism industry.
Airlines from America to Australia are ramping up flights in June and July, with U.S. carriers targeting the great outdoors. They're boosting hopes for a pickup in tourist traffic, even as global travel remains slow during the ongoing health crisis. Major airlines American and United each announced more flights to key U.S. destinations where national parks and other outdoor recreational spaces are reopening. United is adding more non-stop flights to places like Aspen, Colorado and Jackson Hole, Wyoming, where it said quote "social distancing is a natural feature" in the scenic landscapes. But even with the increased flights, analysts expect overall U.S. airline capacity will still be drastically lower this year. Without the bounceback of business travel, they say the amount of revenue airlines make will likely remain negative. Meanwhile, Emirates is restarting transit flights through hubs like Abu Dhabi and Dubai, and Australia's Qantas Airways outlined plans on Thursday (June 4) to boost domestic capacity. On Friday (June 5) Qantas also said that once it's back up to financial strength it'll restart plans to order plane to fly the world's longest nonstop commercial flight from Sydney to London.
Qantas Airways Ltd <QAN.AX> will reactivate plans to order airplanes capable of the world's longest non-stop commercial flights from Sydney to London when the airline returns to financial strength, its chief executive said on Friday. "I think the business case for doing it is very strong," Qantas CEO Alan Joyce said on a tourism industry webcast. Qantas on Thursday said it would triple domestic capacity to 15% of normal levels by the end of the month, with the potential to rise to 40% of normal in July if state border restrictions ease.
Airlines from America to Australia are ramping up flights in June and July, boosting hopes for a pickup in tourist traffic even as bigger-spending business and global travel remains sluggish during the ongoing pandemic. American Airlines and United Airlines each announced more flights to key U.S. business and leisure destinations where national parks and outdoor recreational spaces are reopening after months of lockdowns and travel curbs, sending their shares sharply higher. Chicago-based United is adding more non-stop flights as well as servicing markets like Aspen, Colorado and Jackson Hole, Wyoming where it said "social distancing is a natural feature" in the scenic landscapes.
Australia's Qantas Airways Ltd <QAN.AX> and Air New Zealand Ltd <AIR.NZ> on Thursday outlined plans for significant boosts to domestic capacity as pandemic-related travel restrictions ease, sending their shares higher. Qantas said it would lift domestic capacity to 15% of pre-pandemic levels by the end of June, up from 5% now. The airline said more flights are likely in July depending on travel demand and further opening of state borders, with the ability to increase to up to 40% of pre-crisis capacity by the end of July.
Moody's Investors Service has today confirmed the Baa2 issuer, senior unsecured debt, backed senior unsecured bank credit facility, and (P)Baa2 senior unsecured MTN program, as well as the P-3 commercial paper and (P)P-3 other short-term ratings of Qantas Airways Ltd. (Qantas). The outlook on Qantas has been changed to negative from ratings under review.
Qantas Airways Ltd could restart 40-50% of its domestic capacity in July if states relax border controls, and expects to offer low and flexible fares without social distancing measures to stimulate travel demand, its chief executive said on Tuesday. The airline will introduce measures on board from June 12 such as providing masks and cleaning wipes to ensure safe travel and give passengers peace of mind during the pandemic, but will not leave middle seats empty. "Social distancing on an aircraft is impractical," Qantas Chief Executive Alan Joyce told media.
(Bloomberg Opinion) -- What do you get for the airline magnate who has everything? If he knows what’s best for him, the answer isn’t “another airline.”Rahul Bhatia, the biggest shareholder in India’s biggest carrier, InterGlobe Aviation Ltd., is evaluating data and considering a bid for Virgin Australia Holdings Ltd., a person familiar with the matter told Anurag Kotoky and Angus Whitley of Bloomberg News. He would bid via the vehicle he uses to invest in IndiGo, as India’s biggest budget airline is known, the person said.It’s not hard to see the attractions. IndiGo’s home market is fiercely competitive, with half a dozen major carriers duking it out even after Jet Airways India Ltd. was forced into bankruptcy last year. Jet was squeezed between the loss-making full-service flights offered by state-owned Air India Ltd. and IndiGo’s own devastatingly cheap fares. Australia, on the other hand, is more or less a duopoly between Virgin Australia — which was itself put into a coronavirus-induced administration last month — and a dominant Qantas Airways Ltd. That should offer the opportunity for the two carriers to cozily carve up the market between themselves.Opportunities to break into the Australian airline game don’t come along often. The last time was when Ansett Australia Ltd. collapsed just days after the Sept. 11 attacks. A fledgling Virgin Australia, at the time a budget carrier named Virgin Blue, was perfectly placed to capitalize.Despite the vast disparity in population, Australia isn’t that much smaller than India as a market, thanks to greater wealth and a higher propensity to fly. Traffic last year came to about 71 billion revenue passenger kilometers, roughly the size of the fast-growing Indian aviation market five years ago. It also has close links to India, raising the prospect that an Australian network could feed passengers via international flights into IndiGo’s domestic web of destinations. Indian-Australians make up close to 2% of the population, and the number of non-resident Indians — the subset of the diaspora who are most likely to take regular flights back to the motherland — is the largest after the U.K., U.S., Singapore, Nepal, and the Persian Gulf countries.(1)For all that, Bhatia should pass up the chance to have a crack at Virgin Australia. In its ruthless efficiency in controlling its home turf, Qantas behaves a lot like IndiGo, one reason that Australia has for a decade been a graveyard for ambitious foreign airlines. His best opportunities lie closer to home.Both Qantas and IndiGo exploit a rare and priceless phenomenon known as the S-curve, by which dominant airlines end up with more connections and a greater share of traffic the more planes they add. That makes life extremely difficult for competitors.Singapore’s attempt to set up a bridgehead via an outpost of its budget carrier Tiger Airways Holdings Pte. ended up being sold to Virgin Australia back in 2014 at a valuation of A$2.50 ($1.62), after years of struggle. AirAsia Group Bhd. showed fitful interest in establishing a bigger presence Down Under, but ended up mostly steering clear.Virgin Australia itself spent years trying to break the Flying Kangaroo’s dominance with the backing of strategic overseas players. Ordinary shareholders hold less than 10% of the now-worthless stock, with the balance being held by a rotating cast of carriers including Etihad Airways PJSC, Singapore Airlines Ltd., Hainan Airlines Holding Co., Qingdao Airlines, Air New Zealand Ltd., and Richard Branson’s Virgin Group itself. Their indifference to profits enabled Virgin to compete against Qantas for longer than many would have thought possible, but it hasn’t been enough to win the battle.The distance between Australia and India is too great to make connecting the two markets an easy play, too. IndiGo’s aircraft of choice is the Airbus SE A320neo, which some budget carriers have been using to open up longer-range routes — but it would be operating at its limits even on flights between India and Perth, which is a long way from Australia’s more populous east coast. That would necessitate Bhatia either using an unfriendly hub airport in Southeast Asia, or investing in bigger, more expensive twin-aisle jets.IndiGo is so powerful in its home market that it’s natural its owners should be looking at overseas expansion — but as we’ve argued, the better place for that is in the Persian Gulf, where a far bigger Indian diaspora is closer to home and largely flown across the Arabian Sea on Gulf carriers such as Emirates.With a pandemic-induced passenger drought threatening most non-state-backed players in the global aviation market, this is no time for Bhatia to go planting seeds in Australia’s barren soil.(1) India also counts foreign citizens with Indian ancestry as "Persons of Indian Origin" but they're as a group probably less likely to travel to the subcontinent frequently.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg Opinion) -- Large institutions resist change, and nowhere more so than in the way they pay their bosses.Despite scandals and crises, executive compensation has remained too generous, too opaque and too loosely linked to long-term goals. The upheaval wrought by the Covid-19 pandemic provides the opportunity for a remake: Simpler, smaller packages with a more significant non-financial component would mark a welcome shift.The figures are stark. Inflation-adjusted pay for chief executives at the largest U.S. companies climbed 940% between 1978 and 2018, the Economic Policy Institute found, using the more conservative of two methodologies, in a report published last year. The S&P rose about 700% over the same period. Worker wages, meanwhile, increased by less than 12%.The size of pay packages is only the most eye-catching part of the problem: Far more important is how corporate leaders are remunerated, and whether that lines up with long-term goals, financial and otherwise. As a gauge, consider the increase in attention paid to environmental, social and governance, or ESG, targets. This has permeated incentive plans in only a minority of cases. A mere 9% of FTSE All World companies link executive pay to ESG criteria, mostly occupational health and safety concerns, according to Sustainalytics. Even for those, only a tiny proportion of total remuneration is affected.The good news is that the current cataclysm is prompting better behavior than we saw during the 2008 financial crisis, with at least some leaders moving swiftly to share the pain of employees. Qantas Airways Ltd. Chief Executive Officer Alan Joyce, whose airline has furloughed most of its workforce, won’t take any salary until the end of the financial year in June. Elsewhere in aviation, Ryanair Holdings Plc CEO Michael O’Leary has taken a steep pay cut, along with staff. General Electric Co.’s Larry Culp will forgo his full wage for the rest of 2020.Granted, they have better cushions than most employees and there is self-interest here, given the outsize importance to corporate valuations of intangible assets like reputation. Yet these are welcome gestures, not least when compared to those who have rushed to cut costs and take government help without trimming at the top. They aren’t markers of real change, though. It will be far more significant to see how boards manage short- and long-term incentive decisions for 2020. Shareholder advisers are already warning against excesses in variable pay. There is one bigger reason to anticipate substantial change: timing. The coronavirus has hit at a critical moment for shareholder capitalism. It’s been two years since BlackRock Inc. co-founder Larry Fink told CEOs to contribute to society. The Business Roundtable last year had executives pledge to build companies that serve “all Americans.” ESG demands are louder, as seen at last month’s annual general meeting of Australian oil and gas outfit Santos Ltd. It was happening already; now it’s happening faster.Xavier Baeten, professor in reward and sustainability at Vlerick Business School in Belgium, says companies are likely to see pressure from at least two quarters. First, shareholders may well balk at remuneration that rises when dividends dissipate. Second, governments could make aid dependent on firms not paying bonuses. Society may also find hefty bonuses more unpalatable after months of clapping to support underpaid nurses and carers.So what are the changes to aim for? Pay is inherently complex, and investors can make multiple and often competing demands of one board. It’s also true that despite plentiful research demonstrating that pay isn’t a significant motivating factor for chief executives, the quantum is unlikely to change dramatically. There is, though, plenty of scope to improve structure.Most obviously, a post-pandemic world could do with a stronger push from board members (and investors) for increased transparency and simplicity, with fewer, more individually tailored goals. Then, we need share allocations that encourage executives to think over longer time-frames, and don't just result in colossal pay awards in boom years. This could mean more restricted stock that has to be held for a period even once employment has ceased. It could mean extending ownership requirements. There are plenty of pitfalls: Proxy advisers will need convincing, and long holding periods can mean executives discount the perk. The advantages are significant, though.A third step could be to increase the non-financial portion of targets to as much as half of the total. Again, these aren’t popular with advisers who dismiss what they see as soft goals. Still, as compensation consultant Seymour Burchman of Semler Brossy argues, they reinforce strategy if tailored, specific and measurable. Dutch bank ING Groep NV, for example, uses retail customer growth as one measure. Others might use customer satisfaction, investment targets, total recordable injury frequency rate or, as Semler Brossy’s Kathryn Neel points out, corporate reputation, as gauged by a third party. ESG would be part of this, in a testable and appropriate form that measures opportunity as well as risk. For resources companies, that could be a multiplier that nullifies all bonus in the event of an accident. For a drinks company, it might be water management, or reducing plastic. Combined with the obligation to hold shares for longer, the incentives align.Shareholders’ meetings globally have been delayed or moved online because of the coronavirus, but there is plenty more disruption to come. Boards, the ultimate arbiters, will find decisions this year have lasting consequences. In a crisis, underestimate pay at your peril.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Clara Ferreira Marques is a Bloomberg Opinion columnist covering commodities and environmental, social and governance issues. Previously, she was an associate editor for Reuters Breakingviews, and editor and correspondent for Reuters in Singapore, India, the U.K., Italy and Russia.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Qantas Airways Ltd said on Monday it had advised Airbus SE and Boeing Co that it did not expect to take delivery of any new planes in the near term as it grapples with a plunge in demand due to the coronavirus pandemic. The airline had expected to add three Boeing 787-9 jets to its fleet by the end of 2020 and to start taking delivery in August of the first of 18 Airbus A321neos due by 2022. There is no longer a specific timeline for them to arrive because the market is too uncertain, a Qantas spokesman said, confirming a report on travel website Executive Traveller.
(Bloomberg Opinion) -- These are the most consequential months in the Reserve Bank of Australia's 60-year life, but the economic downturn of historic proportions means nobody is celebrating this diamond jubilee. So deep is the damage inflicted by the Covid-19 pandemic that the central bank's greatly enhanced profile in the economy and markets will be with us for years. That's consistent with a tremendous expansion in the role of the state as leaders Down Under endeavor to simultaneously restore growth and contain infections. The combative relationship between the federal and powerful provincial governments has given way to national priorities, blurring distinctions between responsibilities. In effect, the modus operandi of what was once seen as an economic nirvana has undergone a revolution. Projections suggest much of this is warranted; that makes it no less momentous. Gross domestic product may shrink 10% before bouncing in the second half of the year, the central bank warned Friday in its quarterly outlook. The late growth spurt won't be enough to prevent an annual retreat of 6%. Australia’s GDP hasn't gone south by anywhere near that much since the RBA opened its doors in early 1960. Prior to the central bank’s inception, monetary policy was conducted by the government through what’s now the publicly traded Commonwealth Bank of Australia. The last recession produced a decline of 1.1% in 1991, which seemed severe living through it. The growth streak that followed has gone down in global economic folklore. Buoyed by closer trading ties with China and an unparalleled resources boom, Australia even skated through the Great Recession without two consecutive quarters of contraction. That’s over. The unemployment rate will climb to 10% over coming months and still exceed 7% at the end of next year, under the RBA’s main scenario. It was 5.1% at the end of 2019. The profound shock of the pandemic quickly pushed the bank to cut borrowing costs to almost zero and undertake quantitative easing to suppress the yield on government bonds. Governor Philip Lowe signaled that ultra-easy policy will remain until the country is well down the recovery road. The RBA is also purchasing bonds sold by state governments, saying Tuesday that it will further expand the range of securities eligible for its market operations to include investment-grade debt issued by non-bank companies. While the bank makes its monetary-policy decisions independently, this effectively leaves the six state and two territory administrations more dependent on national authorities and extends the reach of the public sector into corporate life. The former diminishes, at least temporarily, pretensions that local administrations have of separation from the center. The latter is a step toward reversing the intellectual and policy thrust of successive governments since the 1990s, when assets like Qantas Airways Ltd. and Telstra Corp. were unloaded.This rebellion against precedent extends to the political process. Prime Minister Scott Morrison has created a so-called national cabinet to deal with Covid-19. The team of rivals brings state premiers and chief ministers into the federal sanctum, meeting to co-ordinate on business and school closures and prospective re-openings, as well as hospital operations. During the emergency, this elite group has become the core Australian decision-making body. Several of the regional premiers are from the Australian Labor Party, which opposes Morrison’s conservative bloc in the federal parliament. To appreciate the radicalism, imagine Donald Trump bringing New York’s Andrew Cuomo and California’s Gavin Newsom, both Democrats, to the cabinet table in Washington. An effort at seamless decision making addresses the needs of the moment. The public rightly has little time for jurisdictional disputes, even through the constitution gives states a lot of authority. Critics contend that the new set-up is eroding democracy: The national cabinet makes decisions, yet is accountable to no single legislature. Such unity of purpose likely has a finite life. At some point, the electoral cycle will resume. Templates for new national political and economic structures now exist that would have unthinkable a year ago. Catastrophic bushfires over the Christmas-New Year holiday period midwifed a big federal intervention in firefighting, an area states have historically dominated, and led to the biggest military deployment since World War II. In the monetary arena, the ground has been laid for long-term policy activism and rock-bottom rates with potentially far-reaching consequences. Consumers, businesses and governments now know the RBA will backstop them in ways few contemplated not so long ago. And the longer Lowe and his successors keep rates low, the greater the risk of a backlash should they have to change course and begin withdrawing stimulus — an antipodean taper tantrum. Not the anniversary year the RBA anticipated. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Daniel Moss is a Bloomberg Opinion columnist covering Asian economies. Previously he was executive editor of Bloomberg News for global economics, and has led teams in Asia, Europe and North America.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Qantas Airways Ltd said on Tuesday it had secured enough funding to last it through the end of next year, boosting its shares, as it reviews its fleet with the expectation that most international travel could take years to rebound. The Australian carrier secured A$550 million ($352.99 million) against three of its Boeing Co 787-9 aircraft and said it could raise another A$2.7 billion from other aircraft assets if needed. "This means we are very well placed to ride this out and to take part in the recovery when it arrives," Qantas Chief Executive Alan Joyce told reporters.