Qantas: flight from fancy

This Stalinist approach to public relations has finally been recognised by James Strong, resulting in an announcement that he is employing more staff. This about-face says more about the airline and the industry than most would care to admit. By slashing costs - mainly in the form of salaries - Strong has been praised as the man who turned Qantas around. But by his tacit admission, the airline cannot run with as few staff as he has left, as so many disgruntled passengers have made clear lately.

A bad business

That in itself explains why we have such deep misgivings about the airline industry - in short, its capital intensiveness and razor thin margins. You can't run an airline with so few staff, but employing the staff required - apparently - cuts into profits. What a terrible business. Pile the competition of an Impulse here, a Virgin Blue there and the mighty Singapore Airlines on the horizon and growth starts to become a distant memory.

We haven't changed our opinion of the last issue (Steer Clear - $3.47), but thought this latest news was the perfect illustration of what we've been saying for so long now. And what of those who think the stock could make them some money given that's it's been driven to such lows? Well, it could. But the ride will be turbulent and we suggest that if you want to sleep soundly at night and not have nightmares about men in bow ties, STEER CLEAR.