Business Report Qantas Airways

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BUSINESS REPORT ON QANTAS AIRLINES

Hasblady Leon Ramirez (Sofia)
Student No 31278
Class: BAE 10
16th January 2013

TABLE OF CONTENTS

EXECUTIVE SUMMARY3
1.INTRODUCTION4
2.QANTAS ETHICAL EVALUATION5
2.1.Airlines Safety as an Ethical Issue5
3.QANTAS SHARE PRICE EVALUATION6
3.1.Share Price Definition6
3.2.Share Price Behavior 20126
3.3.Share Price History7
4.Recommendation8
REFERENCES9

EXECUTIVE SUMMARY

The aim of this report is to evaluate whether Qantas airways is a suitable company for ethical investment. Firstly, Qantas has currently been incurring in an ethical issue, because it has reduced in almost 50 % its staff in order to obtain better profits, however, the flight safety has been affected due to this maintenance downsizing, also Qantas share price analysis determines that although the stock had a downturn three years ago, it has begun to rise now. However, the result of this report is that, Qantas is not an appropriate company to invest now due to the low share price behavior and maintenance airplane’s issue.

1. INTRODUCTION
The purpose of this report is to evaluate whether Qantas airways is a suitable company for ethical investment. This evaluation is divided in two aspects, ethical investing and share price performance in order to make a recommendation to clients. Currently, companies have begun to make decisions on basis to moral assumptions such as, social consideration, environmental concerns and ethical reporting with the purpose of selecting ethical investment and achieving a competitive financial return (Schwartz 2003, p. 195). According to Michelson, this recent behavior is called ethical investment (Australia and United Kingdom) and socially responsible investment ( United States) and this is a main topic in the financial industry due to the gained importance during the last years (2004, p. 1). Qantas is the largest domestic and international airline that was established in Australia in 1920. Now, Qantas is a business group of customer’s transportation, which is formed by two complementary airline brands (Qantas and Jetstar). The business group employs 35,700 people and 93% of this amount is based in Australia (Qantas 2012). This report is divided in three main points, firstly, analyzing an ethical issue about safety flight on base of airplanes maintenance. Secondly, evaluating the share price history and how the share price behavior, and finally, it give a recommendation to the shareholders in order to acknowledge the company. 2. QANTAS ETHICAL EVALUATION

This report discusses the airline safety in terms of maintenance. Currently, companies search to increase profits and reduce costs; and a common way is a downsizing in an operational process. Qantas reduce the maintenance staff to obtain a better performance and profits; however it threatens the passenger integrity due to the low performance maintenance into airplanes. 3.1. Airlines Safety as an Ethical Issue

Qantas has reduced “500 engineering jobs in Sydney and Victoria” (Herald Sun 2012, para.1). In Sydney that happened because the airline believes that, it had an oversupply of line maintenance engineers. Lyell Strambi, who is Chief Executive of Qantas domestic operations, said that, the cost of its heavy maintenance was more than 30% higher than others airlines, and Qantas needed to close the difference to ensure its “future viability” (Herald Sun 2012, para.17). The Australian Licensed Aircraft Engineers Associations said that, the airplane maintenance has been affected by changes and reductions of maintenance staff without previous risk analysis (Crikey 2012, para.2). For example, in a Qantas flight last year was found a ¨fatigue crack¨ in a turbine on the Boeing 747-400 that led to an explosion in the aircraft motor while it was in the air, the aircraft landed safely and all passenger were safe (News.com.au, 2012, para. 2-3). The company is the company is reducing...
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