SWOT Analysis, Recommendations, and Conclusion

SWOT Analysis, Recommendations, and Conclusion

SWOT Analysis

Strengths

Strong market position

Qantas ranks among the world's leading airlines. It controls the market share of over 30% in the world airline market. Moreover, the company also has a market share of over 65% in its domestic market, Australia. In addition, the company has a wide operating network with flight operations to over 142 destinations including 62 in Australia and 80 overseas, giving it access to a huge customer base. A strong position in the domestic and international markets, and a wide operating network, has boosted the company's competitive edge.

Strong liquidity position

The company has a strong liquidity position. The company's long term debt to equity ratio is 0. 9 which is quite low as compared to industry average of 2.6. Also its debt servicing capacity as measured by interest coverage ratio is 43.7 times as compared to the industry average of 3.8 times. Strong liquidity position of the company would increase its company's credibility in the market and help to pursue its expansion plans (Qantas Annual Report 2011).

Growing net passenger revenues

The company's net passenger revenues have been growing over the years. In 2006 the net passenger revenues were A$10,504 (approximately $7,668.9), an increase of 9. 7% over 2005. Moreover, the net passenger revenues have recorded a CAGR of 4% during the period 2002-06. A continued increase in net passenger revenues, which account for more than 75% of the company's total revenue, has boosted the company's financial performance.

Robust route network

Qantas has a robust route network. The group offer services to 208 destinations in 46 countries, including Australia and those served by codeshare partner airlines. Qantas offers premium airline services through Qantas and QantasLink brandsIn addition, Qantas has been adding new destinations to its route network. For instance, in November 2011, QantasLink launched a new West Australian route, operating its inaugural commercial service between Perth and Geraldton. Similarly, in January 2012, QantasLink decided to launch Boeing 717 services to Rockhampton, Gladstone and Mackay in March 2012 following the addition of the B717 aircraft into its fleet. Further in the same month, Qantas launched A380 services between Australia and Hong Kong, making it the fourth A380 destination in the Qantas network. Thus, the group's strong network infrastructure enables it to gain access to key markets as well as enhance the quality of its delivery services.

Strong fleet operations

Qantas has a strong fleet base to complement its robust route network. The group continues to simplify its fleet to enhance competitiveness. In FY2011, the group operated a fleet of 283 aircraft (including nine aircraft of Network Aviation which was acquired in February 2011), including five freighter aircraft. Hence, a strong fleet operation of Qantas helps it to attain a competitive advantage over its peers (Qantas Annual Report 2011).

Strategic two brand strategy

Qantas is Australia's carrier of choice for premium leisure and corporate travellers. Jetstar is the group's low fare airline and is one of the world's largest low-cost ...