Qantas shares have enjoyed quite a rally since its rather dismal results last Thursday. From $3.13 at Wednesday’s close, they finished at $3.40 yesterday. It all seems a bit much on the strength of introducing a higher fuel surcharge, given the rather dismal outlook with still no chance of meeting the cost of capital.
What really has some airline types scratching their heads, though, was the treatment of $104 million in liquidated damages from Airbus courtesy of late delivery of the 12 A380 aircraft on order. That $104 million was the difference between reporting a 30% profit fall and a 40% dive.
There seems to a belief that in these situations, the $104 million would be paid as discounts on the planes when they are eventually delivered, not as any upfront payment in the financial year just completed.
For Qantas to book such future discounts in the 30 June 2006 financial year might make cynical types think the annual accounts were being spun for some other strange purpose.
Accounting, of course, is a very strange craft. Smoke, mirrors and clear air turbulence can all legally come into play. Sometimes mere mortals just can’t understand how you could lift your profit by $104 million for a discount on something that you haven’t paid for yet.
Heavens knows it’s hard enough just understanding how those heavier-than-air machines stay up.