The use of the media to soften up the public, the shareholders and the employees in advance of bad financial results is a well established PR technique. In the case of the Qantas full year results, due 28 August, the informed speculation season is open!
However, this curtain raiser (or dropper) in the Fairfax press has its peculiarities.
It reports on consideration being given to splitting the domestic and international operations of Qantas, the risk of a total loss of more than one billion for the year to 30 June, and the umpteenth recycling by presumably briefed analysts of the full or partial sale of the Jetstar franchise or the frequent flyer program.
Qantas embarked on a doing the splits operation with much braying and posturing by management more than two years ago, as shown in this now embarrassing report.
Since then and after an undisclosed spend put in other quarters as being more than $100 million the plan was variously abandoned, postponed and ignored.
The exact purpose of the pre-financial results leaks is unclear. If they cause the media to review all of the past statements and policy initiatives of the management of the company under group CEO Alan Joyce and chair Leigh Clifford the exercise will surely have unintended consequences.
There is not a single material announcement that has amounted to anything real in a six year period in which the company has stopped paying dividends, trashed its share price, given away routes to Emirates, the largest of all soverign owned carriers, and ceded market share and been stripped of its investment grade unsecured debt credit ratings.
Despite all the rhetoric Qantas has not made a single accurate call about its overseas Jetstar franchise, and the load factors it is reporting for Jetstar domestic are incompatible with running a successful low cost carrier operation.
According to Qantas guidance, Jetstar is no longer expanding. It is “growing within its own footprint” and parked idle A320s ordered for Jetstar are “operational spares”.
The low cost premium single aisle Qantas controlled Asia based enterprise often referred to as Red Q didn’t materialise.
The Fairfax story coincides with the private circulation of an unfavourable Credit Suisse note about the Jetstar in Asia franchises whose authenticity cannot be verified at this hour. As an editorial policy, proprietary financial analysis is not referenced in any detail unless specific permission to use it has been granted.
At this stage, stories that appear to come from inside Qantas about what is going in advance of the full financial year results disclosure look like pushing stuff uphill.