Re: DJ $158 million profit

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So what is that it doesn't work. Or more accurately, it only works up
to a point. It becomes an exercise in creative accounting rather than
genuine excess of income over outgoing. Put another way, there is only
so much profit you can squeeze out of cost cutting if revenue is static
or only growing slowly. If QF reduced their cost base to DJ level their
profits on the balance sheet would triple overnight. Doesn't mean they
earnt more money. Revenue growth is the only long term way any company
can survive

As I said previously, DJ (and QF) gained a windfall of pax when AN
collapsed but from now on market growth will be incremental rather than
quantum. Their profit increased from $47 mil last year to $158 mil this
year but I doubt very much whether they will record a comparable
increase next year.

Lowering fares doesn't always work either. It might encourage more
people to fly but it will narrow the margin between cost of seat and
revenue per seat and hence reduce rather then increase profits. There
is a finite point beyond which an airline can't make a profit no matter
how many seats they sell. Low Cost Carriers like Virgin, Ryanair,
Easyjet et al have a lower point than majors like QF, BA, etc but it's
there none the less.

Grant
SYD
QF
PS I work in QF Yield Management
PPS Hope I don't come across as lecturing. It's rare I get a chance to
rant on about my chosen field and I get a bit excited sometimes.


----- Original Message -----
From: Alireza Alivandivafa <DEmocrat2n@xxxxxxx>
Date: Tuesday, May 20, 2003 9:25 am
Subject: Re: DJ $158 million profit

> So what.  It works.  They over charge though, and could really
> make a killing
> if they were truely low fare.
>

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