The costs of grounding Qantas is A$20million a day. That is about $SGD26million a day.
1st Question: Would you like to lose $26million a day?
2nd Question: Would you want to own a business that loses $26million a day?
One of the criteria Value Investors look for in a business, is for a business that will not be easily crippled by its labor force. The airline business, unfortunately has a record of workers going on strike.
The key question you should ask yourself regarding the business you want to invest in is if the workers in the business becomes unhappy and want to bargain for more rights, does the business have to bend over to meet these bargains?
If a business is dependant on specialized workers that cannot be replaced easily, the business will have to meet the bargains. Airline businesses depend on pilots and specialized crew. If these workers stop working, it is difficult for the business to get these crew replaced in a short time.
Take a fast food restaurant as a comparison. If Mac Donald’s workers go on strike, will Mac Donald have to bend over and met the request of say, raising their salary?
Given the nature of the business, Mac can relatively easily, get another group of helpers to take over the beautifully systematized business.
All in all, as part of the Value Investing Academy community, we would have avoided the Qantas business all together as it does not passes through the criteria of having easily replaceable labor force.
To make sure you choose the right kinds of business, you need to have the right list of criterias to help you scan the businesses and make the right decision.
In our free workshop, we share the criteria and practice on real live examples. Come join us and you can pick up some gems too.
To your dreams,
Mind Kinesis Research Team