QANTAS AIRWAYS TABLE OF CONTENTS MAIN BODY 1

The sustainability and environmental issues such as reduction of aircraft noise, land-use planning measures and operating restrictions should be in accordance to International Civil Aviation Organisation (ICAO) and Qantas Airways should meet the standards of one year |accordinglysothat environmental impact may be reduced up to a major extent in effective manner. FINANCIAL PERFORMANCE ANALYSIS Financial Ratios of Qantas Airways |Particulars |Formula |2018|2017 | |Profitability | | || |Ratios| | || |Gross

QANTAS AIRWAYS

TABLE OF CONTENTS
MAIN BODY...................................................................................................................................1
1. INTRODUCTION.......................................................................................................................1
2. FINANCIAL PERFORMANCE ANALYSIS.............................................................................1
3. CONTROVERSIAL MATTERS.................................................................................................3
3.1 Price fixing scandal...............................................................................................................3
3.2 Gender discrimination scandal..............................................................................................4
4. CONCLUSION............................................................................................................................5
REFERENCES................................................................................................................................7

MAIN BODY
1. INTRODUCTION
Financial performance requires to be enhanced so that business may be able to attain
efficiency and resources may be utilised up to a high extent. In accordance to this, Qantas
Airways, giant in airline sector in the Australia will be analysed in the report. It is one of the
oldest and largest airline by fleet size based in the Sydney suburb of Mascot having its main hub
at Sydney Airport. Firm had a 65 % share in the Australian domestic market in 2014 and had
carried 14.9 % of inbound and outbound travellers. The airways had strong financial
performance and has acquired businesses such as Jetstar Airways, Qantas Link, Qantas Freight,
Qantas Holidays, Snap Fresh etc. While, it has more than 26,000 of employees as of financial
year 2017. Financial performance of organisation will be assessed by getting into account past
years performances such as 2017 and 2018. For comparing performances, ratio analysis will be
presented which will provide clarity regarding company's performance whether it is
underperforming or adequately performing with reference to past two years. On the other hand,
controversial matters will be discussed and analysed with regards to airline company. Two
scandals such as Price fixing scandal and Gender discrimination scandal will be scrutinised by
referring to case and analysing reason behind such scandals which have damaged business
reputation.
Corporate social responsibility is meant to ensure that company conducts its operations in
ethical manner. Qantas Airways is required to kept into account elements such as social,
economic, environmental impact and also considering human rights. On the other hand,
sustainability and environmental issues are required to be taken into consideration by
organisation. The sustainability and environmental issues such as reduction of aircraft noise,
land-use planning measures and operating restrictions should be in accordance to International
Civil Aviation Organisation (ICAO) and Qantas Airways should meet the standards accordingly
so that environmental impact may be reduced up to a major extent in effective manner.
Moreover, proper security and safety measures needs to be adopted so that it can sustain in the
long-run. Hence, overall analysis will be conducted of Qantas Airways and financial
performance will be assessed.
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2. FINANCIAL PERFORMANCE ANALYSIS
Financial Ratios Computation of Qantas Airways
Particulars Formula 2018 2017
Profitability Ratios
Gross Profit Margin
Gross Profit / Sales *
100 58.9 58.7
Net Profit Margin
Net Profit / Sales *
100 5.89 5.43
Return On Assets
(ROA)
Net Profit / Average
total assets 5.46 5.02
Return On Equity
(ROE)
Net Profit /
Shareholders' Equity 26.16 25.09
Liquidity Ratios
Current Ratio
Current Assets /
Current Liabilities 0.49 0.44
Quick Ratio
Liquid Assets /
Current Liabilities 0.41 0.36
Solvency Ratios
Debt to Equity Ratio Debt / Equity 1.1 1.25
Debt to Assets Ratio Debt / Assets 0.17 0.18
Efficiency Ratios
Inventory Turnover
Ratio
Cost of sales /
Average stock 19.45 18.85
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Debtors Turnover
Ratio
Net credit sales /
Average receivables 21.13 23.69
Creditors Turnover
Ratio
Net credit purchases /
Average payables 116.59 114.24
It can be analysed that overall financial performance of organisation has been analysed
over last two years. Profitability ratios are carried out showing that gross profit margin of Qantas
Airways was 58.7 in 2017 which increased to 58.9 in 2018. This shows that firm is able to
control expenses upon its operational activities (Baker, 2013). It provides clarity that it has good
gross profit in both years. While, it can be assessed that net profit margin was 5.43 in 2017
which maximised to 5.89 in recent year showing that business is able to attain good profit after
deducting all expenses. While, ROA shows how efficiently company uses its assets to generate
profit. ROA in 2017 was 5.02 which reached to 5.46 in 2018. ROE implies whether shareholders'
investment is judiciously used by firm or not. Ratio shows that figure was 25.09 in 2017 which
reached to 26.16 highlighting that investment made by shareholders has been adequately utilised.
Liquidity ratios shows whether firm will be able to meet its obligations within period of
one year or not. Current ratio is being calculated which was 0.44 in 2017 and increased to 0.49 in
2018. The ideal current ratio stands at 2:1 and organisation has low ratio. While, quick ratio
provides clarity whether firm may be able to pay-off liabilities within short period with extreme
liquid assets (Dewberry, 2016). It can be analysed that quick ratio was 0.36 and 0.41 in 2017 and
2018 respectively. It also less than ideal ratio of 1:1. Thus, liquidity position of firm is not much
good.
Solvency ratios are also useful metrics for assessing whether business is solvent enough
for meeting debt obligations to concerned parties. Debt to equity ratio is deployed showing
capital structure of company. Ideal ratio should be less 0.4 which means that 40 % should be
finance with debt and remaining 60 % with equity. The ratio comes to 1.25 in 2017 and
decreased to 1.1 of Qantas Airways showing that firm is heavily reliant on debt and equity is not
utilised up to maximum amount (Annual Report of Qantas Airways 2018. 2018). Hence, it is
required that balance use of both sources of finance should be used in capital structure. While,
debt to assets ratio was 0.18 in 2017 and decreased to 0.17 in recent year which is also low.
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Efficiency ratios shows firm's efficiency in using resources productively. It includes
inventory turnover ratio which was 18.85 in 2017 and increased to 19.45 in 2018 showing that
stock is not replenished frequently leading to increase in ratio. On the other hand, debtors
turnover ratio was 23.69 in 2017 and decreased to 21.13 which is a good indicator as credit
customers are paying fast money to firm. While, creditors turnover ratio was 114.24 and 116.59
in last two years consecutively (Meszaros, 2016). It shows that organisation is taking longer time
to pay-off its creditors. However, overall financial performance of business is good.
3. CONTROVERSIAL MATTERS
3.1 Price fixing scandal
Qantas Airways is one of the oldest flag carrier and largest airline by fleet size in the
Australia. Firm has good reputation over the years, however, price fixing scandal had spoiled its
image. It can be analysed that Qantas Airways had been exposed to tens of millions of dollars of
damages for engaging in its part in global air freight cartel and then received $20 million fine in
Australia. The Federal Court had imposed fine when airline admitted its guilt in relation to
competition regulator for illegally increasing up its freight charges with regards to relationship
with global airlines operators between financial year 2001 and 2006 (O'Sullivan. 2008). In
addition to this, UK-based airline, British Airways has also been fined for involvement with
Qantas Airways.
European authorities and airline regulators are investigating more than two dozen airlines
for price fixing (Zhang, 2015). However, Qantas Airways had already admitted to European
Commission that it will pay-off its liabilities. Despite $61 million in US before scandal was
being admitted by it, Qantas Airways still faces action brought into by freight clients in US. On
the other hand, Maurice Blackburn, law company began $200 million class action in Australia
last year as against Qantas Airways and other six airlines that includes British Airways and Air
New Zealand for intentionally price fixing rates for cargo (Wang, 2014). This has led to incur
burden for paying liabilities by Qantas Airways and eventually, it had set aside $64 million in
February for covering penalties imposed by Australian Competition Commission, New Zealand
and European authorities. This means that organisation was engaged in price fixing scandal in
2008 which had diluted its reputation in international market because of exorbitantly increasing
freight rates.
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3.2 Gender discrimination scandal
The oldest airline has been accused of gender discrimination after firing 14 female aircrat
cleaners and then replacing them with male baggage handlers in the staff. This complaint was
lodged against Qantas Airways which is accused of taking into account sexism discrimination in
the workplace (Qantas sexism claim after sacking female staff. 2010). Sex discrimination case
was being filed and ACTU (Australian Council of Trade Unions) president Sharan Burrow said
that treatment by oldest airline towards women was 'disgraceful act'. However, one of the
spokeswomen said in the interview that we deny about discriminating women as nearly 40 % of
workers are women. It can be analysed that TWU (Transport Workers Union) and ACTU has
accused airline on the basis of gender discrimination. It says women has worked for nearly 13
months for Qantas Airways cleaning planes at Sydney Airport just before they dismissed from
the job and then replaced with men.
In further notice, it was being clarified by the TWU secretary Tony Sheldon that sackings
are continuing in the workplace showing gender discrimination. New discrimination laws are
being brought in by Australian Government in order to eradicate such sexism practices in the
country. The TWU national secretary said that it is important case for providing rights to women
at the workplace. Moreover, direct or indirect both discrimination is required to be stopped for
empowering women in every field (Qantas accused of sex discrimination. 2010). Qantas
Airways, corporate affairs said that airline has not discriminated women. He said that total
workforce of group whether male or female are committed to produce desired results in effective
manner. He concluded that unfortunate decision was taken where Qantas Airways had to let go
after contract they working on which went to another service provider. Total group consisting of
both genders were disbanded, so here no question of sexual discrimination arises as contract was
taken over by other provider.
4. CONCLUSION
Hereby it can be concluded from above report that financial performance is required to be
ascertained in a better manner. Qantas Airways is giant in airline sector in the Australia and has
adequate performance over past couple of years. Moreover, it can be analysed that overall
profitability of organisation is good as earnings, profits and returns are increased. On the other
hand, firm should not get into controversial matters as it was being exposed in price fixing
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scandal and gender discrimination scandal in any manner. Such scandals have negative effect on
company's brand image and financial performance is affected as well. It is needed that fair
practices should be adopted and people must be served accordingly.
Corporate social responsibility is required to be taken into consideration so that society
may be benefited up to a maximum possible extent. It can be analysed that ICAO standards are
required to be followed which is concerned with aviation sector relating to noise disturbance
made by aircraft, policy ad regulations, noise levels should be taken into account so that firm
may comply with such regulations. While, environmental and sustainability issues are also be
complied with Qantas Airways which provides clarity that organisation complies with all such
considerations. Moreover, financial performance of company is appropriate as gross profit and
net profit both are increased quite effectually highlighting efficiency of firm in effective manner.
Furthermore, ROA and ROE are also good, however, it needs to improve upon liquidity and
solvency positions which will lead to improvise overall performance.
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REFERENCES
Books and Journals
Baker, D. M., (2013). Service quality and customer satisfaction in the airline industry: A
comparison between legacy airlines and low-cost airlines. American Journal of Tourism
Research. 1(2). 67–77.
Dewberry, R. S., (2016). Low cost carriers: The rise, fall, rise, fall, and rise again of the basic
airline. Boarding Area.
Meszaros, J., (2016). Protectionism still winning as liberalization stalls. AIN Online.
Wang, S. W., (2014). Do global airline alliances influence the passenger’s purchase decision?
Journal of Air Transport Management. 37. 53–59.
Zhang, Y., (2015). International arrivals to Australia: Determinants and the role of air transport
policy.Journal of Air Transport Management. 44. 21–24.
Online
Annual Report of Qantas Airways 2018. 2018 [PDF] Available Through:
<https://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgy
w/file/annual-reports/2018-Annual-Report-ASX.pdf>.
O'Sullivan. 2008 Qantas fined $20m for price fixing [Online] Available Through:
<https://www.smh.com.au/business/qantas-fined-20m-for-price-fixing-20081211-
6wos.html>.
Qantas accused of sex discrimination. 2010 [Online] Available Through:
<https://www.abc.net.au/news/2010-03-03/qantas-accused-of-sex-discrimination/349006>.
Qantas sexism claim after sacking female staff. 2010 [Online] Available Through:
<https://www.smh.com.au/national/qantas-sexism-claim-after-sacking-female-staff-
20100213-ny38.html>.
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