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Accounting Analysis

4768 words - 20 pages

Table of Contents

* Executive Summary 2

* Company Profile 3

* Business Model 3

* Strategy 4

* Market Environment Analysis
* Carbon Tax 4
* Tourism 5
* Industry Outlook 5

* SWOT Analysis 6

* Financial Analysis
* Profitability 9
* Liquidity 16
* Solvency 17

* Comparison With Virgin Australia
* Profitability 19
* Liquidity 20
* Solvency 21

* Conclusion and Recommendation 22


Reference 23

Appendix
Calculation spreadsheet – Qantas 27
Calculation spreadsheet ...view middle of the document...

In addition, Qantas also operates cargo services through its wholly owned subsidiary Qantas Freight.
Business Model
Qantas also has diversification of businesses in multiple industries through its partially-controlled subsidiaries. The two main subsidiaries, Qantas and Jetstar generate about 70% of its total revenue streams. The table below explains the Business Model Canvas of Qantas.

Strategy
Firstly, Qantas has a wide market business connection around the world covering domestic and international high and low-fare airlines. Qantas has many cooperative partners with various codeshare agreement. For example, in 2010, Qantas entered a joint services agreement with British Airways (BA) so that Qantas customers can now reach 29 destinations in Europe via codeshare services operated by BA. Also, since 2008, Qantas commenced non-stop services three times a week between Sydney and Buenos Aires, and also six return services per week from Sydney to Santiago, via Auckland, on codeshare services operated by Oneworld partners. (Qantas 2014)
Secondly, besides a large number of partners to improve business coverage, Qantas has planned to reduce its operating cost in order to improve efficiency. For instance, over the next 10 years, the Qantas Group has committed a capital investment around US$17 billion in more fuel efficient, next generation aircrafts. Fleet renewal will offer great improvements to fuel efficiency in the long run. (Qantas 2014)

Market Environment Analysis
* Carbon Tax Repeal
Australian government adopted the carbon tax scheme in the July 2012. The scheme aimed to reduce greenhouse gas emissions and encourage investments in the energy efficiency technology. The scheme also drove up the price for airline tickets, which hurt the airline industry further. The Abbott government passed legislation and revoked the carbon tax scheme in July 2014. (Cox 2014) It would be beneficiary for airline companies.

* Tourism
Tourism contributes a significant proportion to usage of airline services. It is also one of the important parts of the Australian economy. During the year of 2012-2013, tourism has directly contributed 42.3 billion dollars to the GDP which is about 2.8% of the total GDP in Australia. (Kookana 2014) According to the forecast by Tourism Research Australia, the number of inbound visitor arrivals is expected to grow average 4% annually to the year of 2023 and total number of outbound passengers would also be growing at a rate of 3.3% annually. (Quinn 2013) Domestic tourism within the country would also be growing for the next decade. The increase in both domestic and international tourism activity would create a large amount of demand for airline services, which would have a positive impact on the Australian airline industry.
* Industry Outlook
With the continuous growths of tourism and abolishment of carbon tax, the prospect of Australian airline industry could be expected reasonably positive. The Australian...

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