Essay on "Quantas Airways Limited Company Financial Analysis History"
Essay 7 pages (1840 words) Sources: 8 Style: Harvard
[EXCERPT] . . . .
Quantas Airways LimitedCompany Financial Analysis
history of the company
Quantas Airways, Ltd. is the number one domestic airline industry in Australia and is a leader in the Asia-Pacific region. In fact, Quantas is among the ten largest airlines in the world and connects Australia in approximately 81 destinations and forty countries throughout the world. The company operates several regional airlines in the country of Australia and carries in excess of thirty million passengers each year. The largest shareholder in Quanta is British Airways plc, holding 18% interest in Quanta. Quanta was founded in March 1919 by two veterans of World War I. In the early 1970s a charter subsidiary, Qantair Ltd. was formed by Qantas and at the same time Qantas began a low fares initiative in which one-way fare between London and Sydney was cut from £276 to £169. Similar cuts occurred for single fares between Australia and four European cities. The British government did not approve the fare at first but Qantas sold the tickets anyway and later in the year, the new fare was approved by Britain. The offerings of Qantas to passengers included charter-level fares with the benefits of scheduled services resulting in the passenger traffic for Qantas airline along with the company's revenue growing "dramatically, despite the huge increase in the price of aviation fuel." (Funding Universe, 2008) in the early 1980's Qantas is reported to have been hit with large operating losses however, the government increased the capital base of Qantas from AUD 89.4 million to AUD 149.4 million and Qantas purchased three upper-deck Boeing 747s and six Extended Range Boeing 767 twi
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QUANTAS SUBSIDIARIES, DIVISIONS, OPERATING UNITS and COMPETITORS
The principle subsidiaries of Qantas Airlines includes: Airlink Pty Ltd.; Australian Air Express Pty Ltd. (50%); Australian Airlines Ltd.; Eastern Australia Airlines Pty Ltd.; Impulse Airlines Pty Ltd.; Jetstar Airways Pty Ltd.; Jetstar Asia (Singapore; 49.9%); Qantas Flight Catering Holdings Ltd.; Qantas Holidays Ltd.; Sunstate Airlines Pty Ltd.; Star Track Express Pty Ltd. Principle divisions of Qantas Airlines includes:
1) International Flying Businesses;
2) Domestic Flying Businesses;
3) Flying Services; and 4) Qantas Freight.
Principle Competitors of Qantas Airlines are those of:
1) Air New Zealand Ltd.; and 2) Virgin Blue Airlines Pty Ltd.
The business segments of the Qantas Group includes those as follows:
1) Qantas - domestic and international airline and QantasLink regional flying businesses, which are supported by the Qantas Engineering and Airports businesses;
2) Jetstar - representing the Jetstar domestic and international flying businesses as well as the Qantas Group's investments in Asian low-cost carriers;
3) Freight - representing the air cargo freight and domestic express freight businesses as well as the Qantas Group's investments in Australia and international express freight businesses;
4) Frequent Flyer - representing the Qantas Frequent Flyer customer loyalty program;
5) Qantas Holidays - representing the wholesale travel and holiday business; and (6) Qantas Flight Catering - representing the in-flight catering business. (Funding Universe, 2008
The following information has been provided by Qantas for the Year Ended 30 June 2008
Consolidated Income Statement for the year ended 30 June 2008.
As shown in the above table the earnings of Qantas for the year ending 30 June 2008 are up from June 2007 with earnings per share up as well from 2007. The following table is the consolidated balance sheet for Qantas as of 30 June 2008.
Qantas 'Consolidated Balance Sheet' as of 30 June 2008.
As shown in the foregoing table company cash and cash equivalents are down from June 2007 however, other financial assets have almost doubled with total current assets being slightly higher than June 2007. Current liabilities increased from 6,939.2 in June 2007, to 7,603.9 in June 2008 however, non-current liabilities have slightly decreased from June 2007 to June 2008. Qantas Airways Revenues are stated at the amount of $16.19bn and the Net Income for the Company is stated at 969.00m. When compared to their industry peers as shown in the following table, Qantas is ahead of the others excepting British Airways both in terms of company revenues and net income.
Peer Industry Review
Name Revenues
TTM) Net Income
TTM) Market Cap Employees
Air China Ltd. H Shr HK 9.29bn 676.31m 6.49bn 37,401
Air France - KLM FR 42.47bn 869.79m 8.44bn 104,659
All Nippon Airways Co Ltd. JP -- 8.47bn 32,593
British Airways UK 19.13bn 1.49bn 5.51bn 42,377
Cathay Pacific Airways Ltd. HK 12.65bn 574.93m 8.11bn 27,000
Japan Airlines Corporation JP -- 6.85bn 50,614
Qantas Airways Ltd. AU 16.19bn 969.00m 6.61bn 33,342
Ryanair Holdings IE 4.86bn 280.09m 6.98bn 6,280
Qantas is stated to be subject to "foreign currency, interest rate, fuel price and credit risks." (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008) This risks are hedged through derivative financial instruments. The policy of Qantas is "not to enter into, issue or hold derivative financial instruments for speculative trading purposes." (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008) it is related that the 'Accounting Standard AASB 139: Financial Instruments: Recognition and Measurement' contains a "strict definition of hedge effectiveness for accounting purposes" and makes a requirement that "all derivatives be held at current market values. Each derivative transaction used to hedge identified risks must be documented and proven to be effective in offsetting changes in the value of the underlying risk within a range of 80% to 125%. This measure of effectiveness may result in economically appropriate hedging transactions being deemed ineffective for accounting purposes." (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008) This report has split the accounting ineffectiveness for derivative transactions into two lines and shown in the following table listing the foreign exchange rate, interest rate and fuel hedging transactions that fail the accounting effectiveness measure in the year ending June 20, 2008.
Source: (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008)
Qantas recognized a loss of $12.3 million as 'ineffective derivatives - open positions'. This amount is stated to have been excluded from the operating result "as it relates to derivative hedging instruments deemed ineffective for accounting purposes that are to hedge underlying risks in future… READ MORE
Quoted Instructions for "Quantas Airways Limited Company Financial Analysis History" Assignment:
Subject: Financial Accounting - Company Analysis
Words: 3000words include 5 pages of An analysis of the financial state of the company based on latest financial statements, including a comparison with either industry averages or other companies in the same industry. (approx three pages, plus tables & charts)
Task:
Qantas Airways Limited; Woolworths Limited; Westpac Banking Corporation; Westfield Group; Telstra Corporation Limited; Tattersall's Limited; Harvey Norman Holdings Limited; ***** Jones Limited; Crown Limited; AGL Energy Limited; JB Hi-Fi Limited; Seven Network Limited.
Choose a major Australian public company listed above. You are to prepare a research report on the company, using the company*****s own web site, the web site of the Australian Stock Exchange www.asx.com.au, and Proquest ABI/INFORM®
website: http://proquest.umi.com/pqdweb?RQT=302&cfc=1
login name: holmes2004
password: holmes
,the business and management information research package available in the Resource Centre (Library).
Your report should include:
 An executive summary (max one page)
 A brief history of the company (approx one page)
 An assessment of the accounting policies used in the latest financial statements in each major accounting area, including:
o Current assets
o Non-current assets
o Current liabilities
o Non-current liabilities
o Revenue recognition
o Determination of cost of sales
o Company income taxes
o Intangibles
o Leases
o Foreign currency transactions (approx five pages)

An analysis of the financial state of the company based on latest financial statements, including a comparison with either industry averages or other companies in the same industry. (approx three pages, plus tables & charts)
How to Reference "Quantas Airways Limited Company Financial Analysis History" Essay in a Bibliography
“Quantas Airways Limited Company Financial Analysis History.” A1-TermPaper.com, 2008, https://www.a1-termpaper.com/topics/essay/quantas-airways-limited-company-financial/96413. Accessed 5 Jul 2024.
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