Executive Brief summary
Qantas Groups' performance within the 2007 to 2011 period has been fairly poor generally as a result of the global financial crisis adversely affecting the firm's worldwide operations. Smartly, Qantas will probably continue to rule the home-based airline market with the achievement of Jetstar prompting development into the Asia Pacific area. The most significant threats facing Qantas include excessive fuel rates, the value of the Australian money and commercial action. A comprehensive financial evaluation reveals that compared to additional airlines, Qantas is exhibiting strong indications of recovery inspite of there being natural weaknesses in the liquidity. A review of the firm's annual statement revealed arsenic intoxication various accounting issues such distortion in the depreciation calculations, however it was determined that they can were not significant enough to greatly impact Qantas general financial position. Overall the firm was located to be within a financially audio position and through the setup of it is " QFuture” program; success is expected to continue to increase in following years. An assessment of the Group's equity discovered that the share price that Qantas is currently trading is overvalued by $0. 60. This is even more supported by the fact that during the last year the buying price of Qantas stocks has been subject to a downward trend indicating that shareholders may have identified the overvaluation. Resulting from the results of our research we for that reason make a " sell” recommendation pertaining to Qantas stock. Overview of Air travel Industry
The Airline industry is regarded as a highly unstable business. This riskiness has been derived from not only in the enormous capital requirement for start-up and maintenance, but as well related to exterior factors just like high level of competition, seasonality and varying of energy prices. In the following section, the Porter's Five Unit is used on the global aircarrier industry in determining the challenges confronted by individuals.
Threat of New Entrants: The enormous amount of capital necessary for initial expense, such as purchase of aircrafts, has created a powerful obstacle to entry to the flight industry. Substantial levels of capital are also necessary for maintaining sufficient supply of funds so air carriers are able to absorb any failures caused by exterior factors including increase in energy prices and decrease of passenger due to seasonality. In addition , the complexity of government policies about licensing and safety measures has created a costly extra barrier achievable firm entering the airline industry. Danger of Alternatives: Substitutes of air travel on a domestic level include transport such as chartering, trains and ferries. The degree of threat created by these types of substitutes is highly dependent on price, time and convenience. In general, the threat encountered by the home-based airline companies are higher than regarding the foreign markets offered the availability of substitutes. The switching expense associated with various frequent flyer reward applications is also essential to be taken into mind when testing the level of risk created by its substitutes as these programs often foster substantial devotion from buyers.
The Bargaining Power of Buyers: The rising volume of airlines around the world and the brutal competition between them, has increased the bargaining power of passengers. Presented the large number of choices and technological advancement, passengers today are capable of researching and contrasting the prices of air seat tickets instantly on the internet and choose from an array of airlines. Therefore , customers are incredibly sensitive to price and may often find the cheapest alternative. However , the reward courses and alliances implemented simply by various flight companies have elevated the switching cost of passengers, particularly frequent flyers.
Negotiating Power of Suppliers: The two significant aircraft suppliers worldwide, Airbus and Boeing, have an industry share of 88% from the 100 – 200...
References: Qantas Total annual Reports 2010, 2011