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KINIBIZ Over the weekend, Tiger took a trip to KLIA to pick up his cousin coming back from the land down under. As Tiger gazed upon the airplanes there, many of them being proud symbols of national pride, Tiger could not help but think of Mr Dickens’ words:

“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us...”

Yet it was not a tale of two cities which went through Tiger’s mind. Rather, it was the tale of two airlines.

The year was 2012, when a certain airline from down under suffered its first net loss since 1993 to the tune of A$245 million from the previous year’s (2011) net profit of A$323 million. Profit before tax (PBT), which was the airline’s preferred financial indicator, plunged to A$95 million from A$552 million the year before.

The airline was dragged down by an 18 percent spike in fuel costs and by its international division which ended the year with a loss of A$450 million. The airline was also grounded by the management in response to a union threat of industrial action. The cost of the grounding would be some A$194 million as well as a significant loss of goodwill among the general public.

Added to this were the usual accusations of incompetent management (by the public) and over-staffing (by the management). The airline which was a source of national pride and a major employer is suddenly starting to looking like a joke and a source of economic worry.

The airline continued to falter and in 2014 suffered a record-breaking loss of A$2.8 billion. A$2.8 billion - a figure that boggles the mind. Still, all was not lost as a closer examination would reveal that the main reason for the massive losses was a A$2.6 billion writedown largely due to the historic cost of aircraft purchased at a much lower Australian dollar exchange rate. It was a ‘paper’ loss, not an actual cash loss. The actual loss was ‘merely’ A$646 million.

This airline is Australia’s Flying Kangaroo or better known as Qantas.

For the full story go to KINIBIZ .

This article was written by Andy Heong.

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