Friday, February 17, 2012

Air Australia grounded stranding 4,000 passengers. Unable to buy fuel at Phuket International Airport

Creditors of Air Australia and thousands of stranded passengers face a nervous wait to see if they will be left out of pocket by the budget airline's collapse.

After just four months of operation, Air Australia's entire fleet was grounded on Friday morning after administrators discovered there was no money to meet basic operational expenses.

As first reported on Friday's AM program,  Air Australia was unable to purchase fuel at Phuket International Airport.

The Brisbane-based airline employed 300 staff and flies to Hawaii, Bali and Thailand, where many passengers have be told to make alternative arrangements.

Thursday, February 16, 2012

ABC Business editor Peter Ryan on speculation about Qantas job cuts

Qantas axes 500 jobs and warns more to come as heavy maintenance operations are reviewed

Qantas chief executive Alan Joyce today confirmed the the airline is sacking at least 500 workers and reviewing hundreds of maintenance positions after reporting a sharp fall in first-half profit.

The airline made $42 million in the six months to the end of December, down 83 per cent on the $241 million it made a year earlier.

I interviewed Alan Joyce shortly after the sackings were revealed in Sydney this morning.

Listen to it here.

Mr Joyce said the fall was due to industrial action, which led him to decide to ground the airline's entire fleet last year. Qantas says the bill for last year's action cost the airline $194 million.

He announced a five-year plan involving changes in engineering, maintenance and ground handling services to make the airline more globally competitive.

Earlier, there was speculation that as many as 1500 sackings would be announced.

However, Mr Joyce said there would be a 60 consultation period with staff and unions.

Commonwealth Bank boss holds out hope of lending rate cut if global conditions improve.

The chief executive of the Commonwealth Bank has held out the possibility of an independent cut to its lending rates if global financial conditions improve.

Ian Narev, who succeeded Ralph Norris as the CBA's boss late last year, says the bank will cut rates if funding conditions are "appropriate" but warned that any move in the short term was unlikely.

Listen to my interview with Mr Narev broadcast on this morning's edition of AM.

Here's the story on ABC News Online.

Australia's biggest home lender yesterday announced a 19 per cent rise in first half profit to $3.62 billion as the political debate about independent rate increases continued to flare.

Mr Narev told AM, however, that if conditions such as funding costs on global markets improved he would consider giving borrowers relief with a cut to lending rates.

"We certainly would consider that, I mean we're in a competitive market and therefore fundamentally we're making an assessment of both the competitive dynamic and the funding costs and in the appropriate circumstances we certainly would be willing to cut our rates," Mr Narev said.

But Mr Narev responded cautiously when pressed on when any cut could come and he ruled out a move the coming year.

"I can't see it coming, quite candidly, in the near future, but I've said a number of times that even the near future is difficult to predict so we really can't rule anything out," he said.

Wednesday, February 15, 2012

Commonwealth Bank delivers $3.6 billion profit but repeats that funding costs have increased. Says there are no "major" plans for job cuts or offshoring

Commonwealth Bank has defied analysts' estimates and recorded a net profit of $3.62 billion, up 19 per cent on the same period last year.

The bank's preferred measure, cash profit, came in at $3.58 billion for the six months to the end of December.

Speaking to analysis this morning, chief executive Ian Narev said the bank was committed to its 52,000 staff and had no plans for major job cuts or offhshoring.

Here's my analysis from The World Today.

The bank says it is becoming increasingly hard to make money from home loans.

In his first results announcement, Mr Narev said it was becoming harder for the bank to make money from home loans but he had seen no sign of customers leaving after the bank's recent increase in its variable mortgage rates.

China signals it might assist in Eurozone bailout - but not just yet.

China has signalled that it's willing to get more deeply involved in resolving Europe's debt crisis.

However, Beijing is being cautious and wants to see more evidence of how Europe is working to resolve its financial woes before putting its hand in its pocket.

So far China has been investing in sovereign bonds and has been supporting the European Financial Stability Facility, but China is wary given that it's already holding US$1.5 trillion of debt from the United States.

China's premier Wen Jiabao has been meeting in Beijing with EU president Herman Van Rompuy, who was doing his diplomatic best to convince China to take on a new customer.

Listen to my analysis from this morning's edition of AM.

Tuesday, February 14, 2012

Reserve Bank fights back on interest rates; says it still pulls the levers on monetary policy

The Reserve Bank has downplayed suggestions that commercial banks are pulling the levers on interest rates.

RBA assistant governor Guy Debelle told a business function in Sydney that moves by the big four banks to lift their mortgage rates outside the central bank's cycle would not alter the influence of monetary policy on the economy.

Listen to my analysis from The World Today and see the story on ABC News Online.

There was an element of fight back in Mr Debelle's speech this morning, given suggestions that the banks were thumbing their nose at both the RBA and the Federal Government, with Federal Treasurer Wayne Swan pressuring banks for months not to lift their rates independently.