1 00:00:05,790 --> 00:00:09,029 Sean Aylmer: Welcome to the Fear & Greed Business Interview. I'm Sean Aylmer. Qantas 2 00:00:09,030 --> 00:00:11,398 Sean Aylmer: is one of the most high profile companies in the 3 00:00:11,400 --> 00:00:14,370 Sean Aylmer: country, and over the last year it's also been one 4 00:00:14,370 --> 00:00:18,450 Sean Aylmer: of the most turbulent. Ouch. From record profits and sky- 5 00:00:18,450 --> 00:00:21,779 Sean Aylmer: high fares to ACCC legal action over canceled flights and 6 00:00:21,780 --> 00:00:25,650 Sean Aylmer: the early departure of longtime CEO Alan Joyce, Qantas has 7 00:00:25,650 --> 00:00:28,679 Sean Aylmer: occupied more than its share of headlines. Now, new boss, 8 00:00:28,679 --> 00:00:30,960 Sean Aylmer: Vanessa Hudson, is trying to move forward with her own 9 00:00:30,960 --> 00:00:34,498 Sean Aylmer: vision for the flying kangaroo. But how do investors see 10 00:00:34,500 --> 00:00:36,720 Sean Aylmer: it? What do they like about the airline, what worries 11 00:00:36,720 --> 00:00:40,199 Sean Aylmer: them, and what does the future hold? Remember, this is general information 12 00:00:40,200 --> 00:00:42,690 Sean Aylmer: only and you should always seek professional advice before making 13 00:00:42,690 --> 00:00:47,068 Sean Aylmer: any investment decisions, including any investment in Qantas. Jakob Cakarnis 14 00:00:47,098 --> 00:00:50,250 Sean Aylmer: is a director of equity research at Jarden Australia. Jakob, 15 00:00:50,250 --> 00:00:51,269 Sean Aylmer: welcome to Fear & Greed. 16 00:00:51,750 --> 00:00:53,309 Jakob Cakarnis: Thanks for having me, Sean. Good to be here. 17 00:00:53,760 --> 00:00:58,770 Sean Aylmer: So can you broadly frame the strengths and weaknesses of 18 00:00:58,920 --> 00:01:01,140 Sean Aylmer: Qantas as we sit today? 19 00:01:02,010 --> 00:01:05,759 Jakob Cakarnis: Yeah, sure. I think it's as simple as having traded 20 00:01:05,759 --> 00:01:08,490 Jakob Cakarnis: now through a lot of the disruptions, as you mentioned, 21 00:01:08,490 --> 00:01:12,450 Jakob Cakarnis: from a restart following COVID- 19, I think the company 22 00:01:12,480 --> 00:01:16,740 Jakob Cakarnis: finds itself competitively on very strong footing and the best 23 00:01:16,740 --> 00:01:19,530 Jakob Cakarnis: way to encapsulate that is its dual brand strategy in 24 00:01:19,530 --> 00:01:22,738 Jakob Cakarnis: the Australian domestic market. So they've got the premium airline, 25 00:01:22,740 --> 00:01:24,089 Jakob Cakarnis: if you want to think about it that way with 26 00:01:24,090 --> 00:01:27,270 Jakob Cakarnis: Qantas and then the low budget end with Jetstar. And 27 00:01:27,270 --> 00:01:29,760 Jakob Cakarnis: then I think, to a certain degree, it's still trying 28 00:01:29,760 --> 00:01:32,700 Jakob Cakarnis: to find its feet internationally about where it fits in 29 00:01:32,700 --> 00:01:36,690 Jakob Cakarnis: the value spectrum for leisure travelers and business travelers as 30 00:01:36,690 --> 00:01:41,429 Jakob Cakarnis: well. I think coupling a very strong brand setting and 31 00:01:41,429 --> 00:01:44,940 Jakob Cakarnis: strong consumer following in Australia, the company's done well also 32 00:01:44,940 --> 00:01:47,490 Jakob Cakarnis: to repair its balance sheet, so undo a lot of 33 00:01:47,490 --> 00:01:50,940 Jakob Cakarnis: the damage that happens when you don't fly as the 34 00:01:50,940 --> 00:01:53,970 Jakob Cakarnis: network's set up to fly over the last two years 35 00:01:53,970 --> 00:01:55,710 Jakob Cakarnis: or through COVID especially. 36 00:01:56,429 --> 00:02:00,119 Sean Aylmer: Okay, so domestically then, it's probably in at least as 37 00:02:00,120 --> 00:02:04,229 Sean Aylmer: good a shape, perhaps better in terms of competitive environment 38 00:02:04,500 --> 00:02:06,360 Sean Aylmer: as it was pre- pandemic. Is that right? 39 00:02:07,260 --> 00:02:09,960 Jakob Cakarnis: Yeah, I think, Sean, you could make a statement quite 40 00:02:09,960 --> 00:02:12,840 Jakob Cakarnis: easily that it's in a better setting. And I think 41 00:02:12,840 --> 00:02:15,418 Jakob Cakarnis: some of that also has to do with how competitors 42 00:02:15,419 --> 00:02:19,139 Jakob Cakarnis: like Virgin have approached the market recovery. I think for 43 00:02:19,139 --> 00:02:23,100 Jakob Cakarnis: all of them dealing with high demand, but also a 44 00:02:23,100 --> 00:02:26,730 Jakob Cakarnis: recovering and increasing cost base has meant that they've all 45 00:02:26,730 --> 00:02:29,550 Jakob Cakarnis: had to lean as much as they can on price. 46 00:02:29,639 --> 00:02:31,800 Jakob Cakarnis: Naturally, that's going to be a part where they bump 47 00:02:31,800 --> 00:02:35,460 Jakob Cakarnis: up against consumers, and I think some of the frustrations 48 00:02:35,460 --> 00:02:39,690 Jakob Cakarnis: about ticket fares and availability, but also reliability of the 49 00:02:39,690 --> 00:02:42,029 Jakob Cakarnis: network are warranted. But I think you need to remember 50 00:02:42,029 --> 00:02:45,810 Jakob Cakarnis: also that there's a delicate balance that these airlines have 51 00:02:46,110 --> 00:02:48,149 Jakob Cakarnis: where they need to make sure that they can continue 52 00:02:48,150 --> 00:02:51,720 Jakob Cakarnis: flying and are also sustainable on a kind of midterm view. 53 00:02:52,380 --> 00:02:54,389 Sean Aylmer: I don't really want to go down the rabbit warren 54 00:02:54,389 --> 00:02:56,250 Sean Aylmer: of balance sheets and profit and loss, but I'm going 55 00:02:56,250 --> 00:02:57,960 Sean Aylmer: to just a little bit put my head in the 56 00:02:57,960 --> 00:03:00,869 Sean Aylmer: warren rather than run down it. I don't know a 57 00:03:00,870 --> 00:03:04,858 Sean Aylmer: lot about investing in national carriers, for example, like Qantas. 58 00:03:05,130 --> 00:03:09,269 Sean Aylmer: However, costs seem to always be a big, big issue 59 00:03:09,270 --> 00:03:12,299 Sean Aylmer: and revenue and costs, better correct me here, Jakob, but 60 00:03:12,300 --> 00:03:15,419 Sean Aylmer: I always think of them as moving in tandem with 61 00:03:15,419 --> 00:03:17,699 Sean Aylmer: each other. I don't know whether that's right or not, 62 00:03:17,699 --> 00:03:19,319 Sean Aylmer: but I know that there's a lot of talk about 63 00:03:19,320 --> 00:03:22,440 Sean Aylmer: Qantas's cost base. Can you explain that a bit better? 64 00:03:23,220 --> 00:03:26,040 Jakob Cakarnis: Yeah, of course, Sean. So one of the key tenants 65 00:03:26,040 --> 00:03:29,250 Jakob Cakarnis: I guess of the COVID recovery was that Qantas were 66 00:03:29,250 --> 00:03:34,619 Jakob Cakarnis: internally looking for cost savings. They told investors in the 67 00:03:34,619 --> 00:03:37,380 Jakob Cakarnis: share market that they could find a billion of cost 68 00:03:37,380 --> 00:03:41,580 Jakob Cakarnis: savings. As you rightly point out, sometimes the revenue environment 69 00:03:41,580 --> 00:03:44,280 Jakob Cakarnis: and the cost environment do move in tandem. And I 70 00:03:44,280 --> 00:03:46,800 Jakob Cakarnis: think for a full service airline like Qantas, one of 71 00:03:46,800 --> 00:03:50,160 Jakob Cakarnis: the biggest buckets that they need to carefully manage is 72 00:03:50,250 --> 00:03:55,590 Jakob Cakarnis: things like staff and headcount costs. Obviously, managing external stakeholders 73 00:03:55,590 --> 00:03:58,740 Jakob Cakarnis: like unions and diverse employee groups makes that a really 74 00:03:58,740 --> 00:04:02,580 Jakob Cakarnis: delicate balance, like I said. The one that's also just 75 00:04:02,580 --> 00:04:05,130 Jakob Cakarnis: as important for them is managing fuel costs. I think 76 00:04:05,160 --> 00:04:09,359 Jakob Cakarnis: relative to the international airlines, with the exception of Singapore 77 00:04:09,360 --> 00:04:13,590 Jakob Cakarnis: Airlines, Qantas is actually the best hedging airline for their fuel 78 00:04:13,590 --> 00:04:15,540 Jakob Cakarnis: costs in the world, so they do get some advantage 79 00:04:15,540 --> 00:04:17,910 Jakob Cakarnis: from that. But like I said, that balances out some 80 00:04:17,910 --> 00:04:21,719 Jakob Cakarnis: of the delicateness of having to take care of their 81 00:04:21,719 --> 00:04:25,349 Jakob Cakarnis: staff and make sure everyone's paid properly for the operating environment. 82 00:04:26,099 --> 00:04:28,710 Sean Aylmer: What about the fact that it is a publicly listed 83 00:04:28,799 --> 00:04:33,539 Sean Aylmer: company and some of its competitors aren't publicly listed, the 84 00:04:34,050 --> 00:04:37,290 Sean Aylmer: Middle East carriers, for example, certainly have government support. How 85 00:04:37,290 --> 00:04:38,849 Sean Aylmer: tough does that make it on Qantas? 86 00:04:39,599 --> 00:04:42,630 Jakob Cakarnis: Yeah, I think in the forward, like you said, the delicate 87 00:04:42,630 --> 00:04:46,139 Jakob Cakarnis: balance for Vanessa, who is the new CEO, is that 88 00:04:46,139 --> 00:04:49,800 Jakob Cakarnis: there's now a diverse range of stakeholders that she needs 89 00:04:49,800 --> 00:04:53,970 Jakob Cakarnis: to manage. The ones that you talk to, shareholders in 90 00:04:53,970 --> 00:04:56,580 Jakob Cakarnis: the past you could have argued quite easily that there 91 00:04:56,580 --> 00:05:00,480 Jakob Cakarnis: was much more shareholder primacy. The latest performance is showing 92 00:05:00,480 --> 00:05:04,320 Jakob Cakarnis: really that the company's trying to balance the needs of 93 00:05:04,589 --> 00:05:08,820 Jakob Cakarnis: the external stakeholders like customers, government, and also maybe to 94 00:05:08,820 --> 00:05:12,539 Jakob Cakarnis: an increasing but unnatural degree, the media as well. Just 95 00:05:12,540 --> 00:05:15,149 Jakob Cakarnis: along the veins of social license to operate, I think 96 00:05:15,450 --> 00:05:19,349 Jakob Cakarnis: when Qantas has at periods compromised its social license to 97 00:05:19,349 --> 00:05:23,489 Jakob Cakarnis: operate, it does make things like pricing decisions, which may 98 00:05:23,490 --> 00:05:27,150 Jakob Cakarnis: be economic for shareholders, much harder to get from customers. 99 00:05:27,480 --> 00:05:29,730 Sean Aylmer: Jakob, you should be a diplomat, because I'm going to 100 00:05:29,820 --> 00:05:32,970 Sean Aylmer: dive into what you just said then, but I'll be 101 00:05:32,970 --> 00:05:36,120 Sean Aylmer: nice. So Vanessa Hudson obviously took over from Alan Joyce. 102 00:05:36,540 --> 00:05:40,859 Sean Aylmer: The media piled on to Qantas and specifically Alan Joyce 103 00:05:40,859 --> 00:05:43,409 Sean Aylmer: over some of the decisions they made. What you are 104 00:05:43,439 --> 00:05:46,560 Sean Aylmer: talking about is kind of a kickback from that though, 105 00:05:46,560 --> 00:05:48,360 Sean Aylmer: isn't it? They have to pay more attention a little 106 00:05:48,360 --> 00:05:52,469 Sean Aylmer: bit to that social license, to their PR than perhaps 107 00:05:52,469 --> 00:05:55,650 Sean Aylmer: they have previously because of what happened 12 months ago. 108 00:05:56,219 --> 00:05:58,019 Jakob Cakarnis: I think that that's a fair summation. I think some 109 00:05:58,020 --> 00:06:00,810 Jakob Cakarnis: of the subtext of what I'm talking to is the $ 110 00:06:00,810 --> 00:06:04,409 Jakob Cakarnis: 230 million investment in the customer. Both you and I, 111 00:06:04,410 --> 00:06:07,320 Jakob Cakarnis: Sean, could agree and at a steady state, I don't think 112 00:06:07,320 --> 00:06:11,160 Jakob Cakarnis: we'd see too many customers explicitly calling out investments in 113 00:06:11,160 --> 00:06:13,198 Jakob Cakarnis: customers. So yeah, I think some of the redress really 114 00:06:13,200 --> 00:06:16,830 Jakob Cakarnis: comes through in the near term, lower profits for shareholders 115 00:06:16,830 --> 00:06:18,210 Jakob Cakarnis: from that reinvestment. 116 00:06:18,869 --> 00:06:21,150 Sean Aylmer: Stay with me, Jakob. We'll be back in a minute. 117 00:06:27,960 --> 00:06:31,469 Sean Aylmer: I'm speaking to Jakob Cakarnis, director of equity research at 118 00:06:31,469 --> 00:06:35,309 Sean Aylmer: Jarden Australia. So how do you think Vanessa Hudson has 119 00:06:35,309 --> 00:06:39,180 Sean Aylmer: done in the first period? Also, there's been some other 120 00:06:39,180 --> 00:06:41,550 Sean Aylmer: execs that have left the business, so a bit of 121 00:06:41,550 --> 00:06:44,309 Sean Aylmer: a shake up all around. How do you think management 122 00:06:44,309 --> 00:06:45,000 Sean Aylmer: is at the moment? 123 00:06:45,719 --> 00:06:48,690 Jakob Cakarnis: I think transition's hard for any company, Sean. I think 124 00:06:49,020 --> 00:06:52,438 Jakob Cakarnis: continuity, especially for airlines, particularly through the period that we've 125 00:06:52,440 --> 00:06:55,890 Jakob Cakarnis: just been through is so important and naturally there's going 126 00:06:55,890 --> 00:06:58,650 Jakob Cakarnis: to be friction points in management change. I think if 127 00:06:58,650 --> 00:07:00,630 Jakob Cakarnis: we talk to what we know so far, there's been 128 00:07:00,630 --> 00:07:04,200 Jakob Cakarnis: no explicit change to the company's strategy, that we're asked 129 00:07:04,200 --> 00:07:06,659 Jakob Cakarnis: a lot about the margin targets that they put to 130 00:07:06,660 --> 00:07:10,109 Jakob Cakarnis: the market under Alan's tenure about whether or not they'd 131 00:07:10,109 --> 00:07:12,750 Jakob Cakarnis: still be achievable and they haven't walked back from those. 132 00:07:12,750 --> 00:07:15,900 Jakob Cakarnis: So I think investors will judge them on whether or 133 00:07:15,900 --> 00:07:19,320 Jakob Cakarnis: not, although that a change in the personnel has happened, 134 00:07:19,620 --> 00:07:23,160 Jakob Cakarnis: whether there is actually continuity in strategy and then performance 135 00:07:23,160 --> 00:07:23,640 Jakob Cakarnis: from that. 136 00:07:24,450 --> 00:07:26,159 Sean Aylmer: So Qantas is spending a lot of money on new 137 00:07:26,160 --> 00:07:28,949 Sean Aylmer: initiatives. You called out the $ 230 million, I think you 138 00:07:28,949 --> 00:07:32,190 Sean Aylmer: said. A lot of that is about helping customers, but 139 00:07:32,190 --> 00:07:35,520 Sean Aylmer: there's sort of food and beverage and doing more on 140 00:07:35,520 --> 00:07:39,690 Sean Aylmer: loyalty rewards and that type of stuff. It's suddenly becoming 141 00:07:39,690 --> 00:07:42,960 Sean Aylmer: a bit service- oriented and it's a ridiculous thing to 142 00:07:42,960 --> 00:07:45,029 Sean Aylmer: say because obviously service is always at the heart of 143 00:07:45,030 --> 00:07:48,210 Sean Aylmer: Qantas, but they're trying harder in that area for customers. 144 00:07:49,050 --> 00:07:51,480 Jakob Cakarnis: Yeah, I think some of the glaring issues that they've 145 00:07:51,480 --> 00:07:57,030 Jakob Cakarnis: had, particularly on lost bags, on- time performance are things 146 00:07:57,030 --> 00:08:00,719 Jakob Cakarnis: that would force customers over a long period of time 147 00:08:00,719 --> 00:08:03,030 Jakob Cakarnis: to reconsider their purchasing decisions. And I guess what I'm 148 00:08:03,030 --> 00:08:05,609 Jakob Cakarnis: saying there is when you're paying what is a premium 149 00:08:05,609 --> 00:08:08,130 Jakob Cakarnis: price in the market, I think the expectation, rightfully, is 150 00:08:08,130 --> 00:08:10,470 Jakob Cakarnis: that you get a premium service. And what we're seeing 151 00:08:10,470 --> 00:08:13,170 Jakob Cakarnis: a lot of that investment should flex and catch up 152 00:08:13,170 --> 00:08:16,920 Jakob Cakarnis: the gap between the perception of performance and how Qantas 153 00:08:17,370 --> 00:08:19,950 Jakob Cakarnis: are perceived in the market by their customers and what 154 00:08:19,950 --> 00:08:22,889 Jakob Cakarnis: customers are actually having in terms of a lived experience 155 00:08:22,889 --> 00:08:26,880 Jakob Cakarnis: when they're boarding or waiting to board a Qantas plane. 156 00:08:27,420 --> 00:08:29,610 Sean Aylmer: A lived experience I won is a Sydney, New York 157 00:08:29,610 --> 00:08:33,510 Sean Aylmer: direct flight. How far away, Jakob, are we from that? 158 00:08:33,990 --> 00:08:37,439 Sean Aylmer: And I know that Qantas has boosted its CapEx bill 159 00:08:37,889 --> 00:08:40,109 Sean Aylmer: to buy new aircraft, but it just looks like the 160 00:08:40,109 --> 00:08:41,728 Sean Aylmer: long range stuff's been pushed back a bit. 161 00:08:42,630 --> 00:08:44,368 Jakob Cakarnis: Yeah, it seems like we've moved to the right a 162 00:08:44,370 --> 00:08:46,920 Jakob Cakarnis: little bit. I don't think it's anything meaningful as in 163 00:08:47,220 --> 00:08:50,760 Jakob Cakarnis: Qantas are readdressing their plans for direct flying. What we 164 00:08:50,760 --> 00:08:53,040 Jakob Cakarnis: get spoken to a lot about as investors or the 165 00:08:53,040 --> 00:08:57,059 Jakob Cakarnis: broader investor community is how successful Perth, London has been 166 00:08:57,059 --> 00:09:00,000 Jakob Cakarnis: for a direct point- to- point travel, where we are as 167 00:09:00,000 --> 00:09:04,410 Jakob Cakarnis: an isolated island, the notion of direct travel is super 168 00:09:04,410 --> 00:09:07,710 Jakob Cakarnis: appealing maybe for certain types of customers. So let's say 169 00:09:07,710 --> 00:09:11,370 Jakob Cakarnis: it's predominantly premium cabin- orientated or those that have pressing 170 00:09:11,370 --> 00:09:14,009 Jakob Cakarnis: time needs. How far away are we? It's a great 171 00:09:14,009 --> 00:09:16,319 Jakob Cakarnis: question. I think for it to be economical, I still 172 00:09:16,320 --> 00:09:20,040 Jakob Cakarnis: think we're talking about maybe '27, '28, so we talk 173 00:09:20,040 --> 00:09:22,319 Jakob Cakarnis: fiscal year, so that would put us in calendar year 174 00:09:22,350 --> 00:09:26,880 Jakob Cakarnis: 2028, 2029. It still does seem a little far away, 175 00:09:26,880 --> 00:09:30,929 Jakob Cakarnis: but the technology's definitely enabled. It's about now getting the 176 00:09:30,929 --> 00:09:33,599 Jakob Cakarnis: right awareness around the business, but also the physical capital, 177 00:09:33,599 --> 00:09:34,260 Jakob Cakarnis: like you say. 178 00:09:34,920 --> 00:09:37,740 Sean Aylmer: What about the other stuff at Qantas? So frequent flying 179 00:09:37,770 --> 00:09:40,020 Sean Aylmer: is one part of that, freight is another part. How 180 00:09:40,020 --> 00:09:40,920 Sean Aylmer: are they all performing? 181 00:09:41,940 --> 00:09:44,670 Jakob Cakarnis: Frequent flyer, Sean, is probably one of the biggest discussions 182 00:09:44,670 --> 00:09:47,730 Jakob Cakarnis: and points of contention for the market and it has 183 00:09:47,730 --> 00:09:50,579 Jakob Cakarnis: been a fantastic growth driver and free cash flow generator 184 00:09:50,580 --> 00:09:53,309 Jakob Cakarnis: for Qantas. And I think it's fair in saying it's 185 00:09:53,309 --> 00:09:56,100 Jakob Cakarnis: almost without rival in terms of a loyalty scheme and 186 00:09:56,100 --> 00:10:00,270 Jakob Cakarnis: its profitability within Australia. But I think part of that's also 187 00:10:00,300 --> 00:10:03,330 Jakob Cakarnis: its greatest weakness, and like I spoke about before, the 188 00:10:03,330 --> 00:10:05,909 Jakob Cakarnis: investment in the customer, part of that will be in 189 00:10:05,910 --> 00:10:09,300 Jakob Cakarnis: Qantas frequent flyer. And I think what we're looking for and 190 00:10:09,809 --> 00:10:14,070 Jakob Cakarnis: the investment community is where when I'm addressing that is 191 00:10:14,429 --> 00:10:17,220 Jakob Cakarnis: how do they balance up the value proposition of points 192 00:10:17,220 --> 00:10:20,639 Jakob Cakarnis: redemption for customers? So I'm sure you have done it, 193 00:10:20,639 --> 00:10:22,920 Jakob Cakarnis: I've done the exercise as well is it just doesn't 194 00:10:22,920 --> 00:10:24,929 Jakob Cakarnis: look as though your points go as far as maybe 195 00:10:24,929 --> 00:10:28,079 Jakob Cakarnis: they have done in the past. So in order to 196 00:10:28,109 --> 00:10:33,360 Jakob Cakarnis: retain that loyalty, which ultimately benefits Qantas from its capacity, 197 00:10:33,360 --> 00:10:36,420 Jakob Cakarnis: its visitation, its preference as a brand over other airlines 198 00:10:36,690 --> 00:10:40,230 Jakob Cakarnis: is how valuable that loyalty program is to people. And 199 00:10:40,230 --> 00:10:43,169 Jakob Cakarnis: I still think, and rightfully the company's addressing this, but 200 00:10:43,170 --> 00:10:46,348 Jakob Cakarnis: there's still a gap to close to that articulated benefit 201 00:10:46,350 --> 00:10:47,250 Jakob Cakarnis: to their flyers. 202 00:10:47,910 --> 00:10:51,390 Sean Aylmer: Okay. And then what about freight? We can't have an 203 00:10:51,390 --> 00:10:53,578 Sean Aylmer: interview and not mention Jetstar as well. What about those 204 00:10:53,580 --> 00:10:54,570 Sean Aylmer: two operations? 205 00:10:55,080 --> 00:10:57,059 Jakob Cakarnis: Yeah, why don't we start with Jetstar. I think it's 206 00:10:57,840 --> 00:11:00,659 Jakob Cakarnis: one of the parts of the network that's maybe less 207 00:11:00,660 --> 00:11:04,650 Jakob Cakarnis: glamorous than the international first- class lounge and talking about 208 00:11:04,650 --> 00:11:09,208 Jakob Cakarnis: a rapidly growing loyalty scheme. It sits at a perfect 209 00:11:09,270 --> 00:11:12,449 Jakob Cakarnis: juncture in the market where it can go after the 210 00:11:12,450 --> 00:11:16,920 Jakob Cakarnis: leisure traveler at a very low ticket price with historically 211 00:11:16,920 --> 00:11:21,208 Jakob Cakarnis: very reliable on- time performance at a market position that's 212 00:11:21,210 --> 00:11:24,840 Jakob Cakarnis: very hard for competitors and especially new entrants to address. 213 00:11:24,840 --> 00:11:28,080 Jakob Cakarnis: So that's, for me, that's a jewel in the crown 214 00:11:28,080 --> 00:11:31,020 Jakob Cakarnis: that kind of needs some polishing to become clearer. I 215 00:11:31,020 --> 00:11:35,549 Jakob Cakarnis: think the investment community understands its value, particularly as a 216 00:11:35,610 --> 00:11:38,130 Jakob Cakarnis: jewel brand strategy if we can talk to it like 217 00:11:38,130 --> 00:11:40,529 Jakob Cakarnis: that, like I said, with the high- end brand, but 218 00:11:40,529 --> 00:11:43,140 Jakob Cakarnis: that's going extremely well and I think we'll continue to 219 00:11:43,140 --> 00:11:46,830 Jakob Cakarnis: see the strength from that business. Again, like all of 220 00:11:46,830 --> 00:11:50,338 Jakob Cakarnis: the business, Sean, it can just see maybe some of 221 00:11:50,340 --> 00:11:53,940 Jakob Cakarnis: the closure of that perception in value gap, if you 222 00:11:53,940 --> 00:11:56,279 Jakob Cakarnis: like, from people who are actually using the service. 223 00:11:56,790 --> 00:11:57,750 Sean Aylmer: Okay. And freight? 224 00:11:58,199 --> 00:12:02,700 Jakob Cakarnis: Freight's trickier now. We as analysts in the investment community 225 00:12:02,700 --> 00:12:05,130 Jakob Cakarnis: don't get a lot of transparency of the financial performance 226 00:12:05,130 --> 00:12:09,629 Jakob Cakarnis: of freight. The concern that I have there is that 227 00:12:09,630 --> 00:12:13,139 Jakob Cakarnis: as more international competition comes back into the Australian markets 228 00:12:13,139 --> 00:12:15,809 Jakob Cakarnis: as borders open back up and actually one of the 229 00:12:15,809 --> 00:12:18,960 Jakob Cakarnis: biggest flex points will be potentially with lower fuel prices, 230 00:12:19,290 --> 00:12:22,380 Jakob Cakarnis: we're going to see belly space, which is the space 231 00:12:22,380 --> 00:12:26,700 Jakob Cakarnis: within the general air travel industry open back up and 232 00:12:26,730 --> 00:12:28,410 Jakob Cakarnis: yeah, that will be harder for them to drive, I 233 00:12:28,410 --> 00:12:30,990 Jakob Cakarnis: think, Sean, as an earnings driver moving forward. 234 00:12:32,009 --> 00:12:34,379 Sean Aylmer: Okay, so I think, am I right in saying, Jakob, 235 00:12:34,379 --> 00:12:37,020 Sean Aylmer: that you've got a buy on Qantas and I hasten 236 00:12:37,020 --> 00:12:38,760 Sean Aylmer: to add to all our listeners out there, make sure 237 00:12:38,760 --> 00:12:41,130 Sean Aylmer: you look after yourself and get professional advice before making 238 00:12:41,130 --> 00:12:43,588 Sean Aylmer: any investment decisions. You have a buy, why, at the 239 00:12:43,590 --> 00:12:44,040 Sean Aylmer: end of the day? 240 00:12:44,670 --> 00:12:46,800 Jakob Cakarnis: At the end of the day, we think that there's 241 00:12:46,800 --> 00:12:52,499 Jakob Cakarnis: enough value from a investment fundamentals perspective in the share 242 00:12:52,500 --> 00:12:56,670 Jakob Cakarnis: price, but ultimately for us it's a well- positioned airline 243 00:12:56,670 --> 00:13:01,080 Jakob Cakarnis: in a global industry that's historically been very competitive with 244 00:13:01,140 --> 00:13:04,860 Jakob Cakarnis: a balance sheet boringly that's got a lot of capacity 245 00:13:04,860 --> 00:13:07,348 Jakob Cakarnis: to withstand some of the volatility that you'd expect with 246 00:13:07,349 --> 00:13:10,409 Jakob Cakarnis: an airline. And that's things like being able to withstand 247 00:13:10,410 --> 00:13:15,450 Jakob Cakarnis: shutdowns from COVID- 19 and also competitive volatility, like you said, 248 00:13:15,450 --> 00:13:19,080 Jakob Cakarnis: from Middle Eastern carriers or any other entrant that sees 249 00:13:19,080 --> 00:13:21,990 Jakob Cakarnis: the Australian market as attractive from a profit pool perspective. 250 00:13:22,559 --> 00:13:24,449 Sean Aylmer: Jakob, thank you for talking to Fear & Greed. 251 00:13:25,020 --> 00:13:26,189 Jakob Cakarnis: Thank you. Thanks for having me. 252 00:13:26,610 --> 00:13:30,419 Sean Aylmer: That was Jakob Cakarnis, director of equity research at Jarden 253 00:13:30,480 --> 00:13:33,179 Sean Aylmer: Australia. This is the Fear & Greed Business Interview. Remember, this 254 00:13:33,179 --> 00:13:36,150 Sean Aylmer: is general information only and you should seek professional advice 255 00:13:36,150 --> 00:13:39,659 Sean Aylmer: before making investment decisions. Join us every morning for the 256 00:13:39,660 --> 00:13:42,630 Sean Aylmer: full episode of Fear & Greed, daily business news for people 257 00:13:42,630 --> 00:13:46,020 Sean Aylmer: who make their own decisions. I'm Sean Aylmer. Enjoy your day.