Business Analysis Report: Qantas Airways' Strategies and Financials

This report provides a comprehensive business analysis of Qantas Airways, examining its company background, mission, and strategic objectives. It delves into the airline's business strategy, highlighting its focus on differentiation, brand reputation, and customer service. The report includes a Porter's analysis of the airline industry, assessing competitive forces and market dynamics. Furthermore, it explores Qantas's key accounting policies and estimates, including revenue recognition and asset valuation. The report concludes with an assessment of the accounting quality, referencing compliance with accounting standards and the presentation of financial statements. The analysis draws upon various sources, including Qantas's annual reports and industry publications, to offer a well-rounded view of the airline's operations and financial performance.

BUSINESS ANALYSIS

Company Background and Mission
 Qantas Airways Ltd. is Australian flag carrier and the major airline by
its size of fleet, international destination and the international flights.
After Avianca and KLM, this airline is third oldest airline in world.
 It was founded in year 1920 and began its international passenger
flights in 1935 (Qantas.com. 2019).

Continued…
 Qantas airline provides transportation of the passengers with the help
of two airlines, which includes Qantas and Jetstar and operating
domestic, international and the regional services.
 Qantas airways also includes Qantas Freight and Qantas Frequent
Flyer that generates diverse streams of revenue and adds value for
the investors and customers (Whyte and Lohmann, 2015).

Continued...
 The mission of Qantas airways is to create the environment of work,
which helps in supporting people and enables them for doing their
best work.
 The company has ongoing focus to manage performance at both
individual and the team level.
 The management of Qantas airline is two way process to incorporate
individual and managers responsibilities.

Continued…
 The company aspires for becoming one of the largest airlines of
Australia that connects more than 1000 destination over globe.
 Qantas has always been known for its loyalty programs, world class
service of customer and for ensuring customer engagement with
efficient distribution and sales strategies (Qantas.com. 2019).

Business Strategy Analysis
 The business strategy of Qantas leads towards accomplishing their
mission.
 It emphasizes on various things such as strong reputation brands,
safety first, forward thinking, great people, safety first, giving
feedback and environmental responsibility.
 The company focusses on all types of the business strategy, for
instance differentiate and cost leadership, but Qantas emphasizes on
the differentiation from the other airlines (Investor.qantas.com.
2019).

Continued…
 The porters analysis of Qantas is consists of industry rivalry,
substitutes, potential new entrants, buyers and suppliers.
 The airline market of Australis is regulating by the government but
during 1990, deregulations has resulted into acquisition of local
airline of Australia and being market leader.
 The airline industry is consist of high competition and lower risk
because of higher costs and rate of return (Investor.qantas.com.
2019).

Continued…
 The potential new entrants are higher in airline industry due to the
deregulations.
 The high or low substitutes depends on customer’s favorite choices
for instance, time, budget and convenience
 The suppliers bargaining power is higher in current industry of
airline.
 The buyers bargaining power is higher in airline industry.

Key Accounting Policies and Estimates
 The estimates as well as associated assumption are on the basis of
historical experiences and different other factors.
 It is believed to be reasonable in the situations, outcome of which
forms basis to make judgements about assets and the liabilities
carrying value that are readily not apparent from the other sources
(Qantas.com. 2019).

Continued…
 The recognition of provision is done in case, if as result of the
past event, there is constructive or legal obligations, which can
be reliably measured and which is having probability that
economic benefit outflow will be required for settle down
obligations (Qantas.com. 2019).

Continued…
 In case of materiality of effect, determination of provision is done by
discounting of expected cash flow of future, required for settle down
obligations at pre-tax rate, which helps in reflecting current market
assessment of the time value of money and risk specific to liability.
 The discount underwriting is treated as finance expense in
consolidated income statement (Obradović and Karapavlović 2016).

Continued…
 The plant, property and equipment items are stated at the cost
less to the impairment losses and accumulated depreciation.
 The item of PPP are recorded initially at the cost, being fair value
of provided consideration plus the incidental costs that is directly
attributable to acquisition.

Accounting Quality Assessment
 The consolidated financial statements are the general purpose
financial statements, which have been prepared according to
Accounting Standards of Australia adopted by AASB and
Corporation Act (Investor.qantas.com. 2019).

Continued…
 The statements of company also complies with the IFRS and IFRICs
adopted by IASB.
 The consolidated financial statement of Qantas is prepared based on
historical cost except for derivatives at the fair value, classified asset
as assets for sale and net defined benefit assets at fair value
(Homsombat, Lei and Fu 2014).

Continued…
 The financial report preparation of Qantas Airlines gives fair and true
value and it is free from any kind of material misstatement, whether
because of error or fraud (Arcondara et al. 2017).

Reference
 Arcondara, J., Himmi, K., Guan, P. and Zhou, W., 2017, January. Value oriented big data
strategy: analysis & case study. In Proceedings of the 50th Hawaii International
Conference on System Sciences.
 Homsombat, W., Lei, Z. and Fu, X., 2014. Competitive effects of the airlines-within-
airlines strategy–Pricing and route entry patterns. Transportation Research Part E:
Logistics and Transportation Review, 63, pp.1-16.
 Investor.qantas.com. 2019. [online] Available at:
https://investor.qantas.com/FormBuilder/_Resource/_module/doLLG5ufYkCyEPjF1tpgyw/
file/annual-reports/2019-Annual-Report-ASX.pdf [Accessed 18 Dec. 2019].
 Obradović, V. and Karapavlović, N., 2016. The influence of company legal form and size
on accounting policies disclosures. Contemporary Issues in Economics, Business and
Management–EBM, pp.223-231.
 Qantas.com. 2019. About us | Qantas US. [online] Available at:
https://www.qantas.com/us/en/about-us.html [Accessed 18 Dec. 2019].
 Whyte, R. and Lohmann, G., 2015. The carrier-within-a-carrier strategy: An analysis of
Jetstar. Journal of Air Transport Management, 42, pp.141-148.