Rooing the day: Qantas passengers and crew taken for a ride by the board

by Michael Sainsbury | Jun 24, 2022 | Business, Latest Posts

The Qantas board is offering staff an $87m bribe as it slashes real wages and conditions. As ever, shareholders and Qantas fat cats get the cream, writes Michael Sainsbury.

Qantas chief executive Alan Joyce, now in his 14th year at the helm of the sometimes flying/sometimes not kangaroo, is famed for his ability to shake money out of government and pull serial financial sleights of hand to boost the company shares and his own hefty remuneration.

The latest rabbit he has extracted from his hat is a $5000 “payment” to mollify the company’s 19,000 workers, potentially worth $87 million, with the rider that they must sign up to new industrial agreements. So far only 4000 have. 

“It’s a straight-up bribe,” one former Qantas pilot with lengthy experience told Michael West Media.

The comment is backed by TWU secretary Michael Kaine. “This is not a ‘thank you’ payment, it’s more like a bribe,” Kaine said in a joint statement with the Australian Services Union and the Flight Attendants Association of Australia.

The strings attached to this sham payment are just more wage suppression tactics Qantas has become accustomed to under the 15-year Joyce regime. All workers, especially those illegally sacked by Qantas management, are owed this payment and far more..

Outsourced workers were already ripped off [with] a 2019 bogus bonus designed to pressure workers into accepting shoddy deals to suppress wages and conditions. These workers never even had the chance to negotiate those agreements because Qantas management outsourced them to avoid collective bargaining – which four federal court judges unanimously agreed was unlawful.”

Distractions distractions

Kaine added that for Joyce, this tactic kills two birds with one stone. First to distract the angry public from Qantas’ poor performance, and second to pressure workers into accepting wage freezes that will “crush pay and conditions at the airport for decades”. Kaine called for a Safe and Secure Skies Commission “to bring overpaid executives into line, support decent, secure jobs and return aviation to an industry that prioritised safety and service.”

Joyce has also said he is working on a 2% wage rise for staff – a real wages cut – claiming the company can’t afford a cost-of-living increase. While today it also announced further 5% cut to domestic flights on top of 10% announced previously,  it has also hiked seat prices stratospherically, with one business passenger saying they paid $18,000 return from Sydney to Los Angeles, a trip that cost $5000-$6000 pre-Covid.

Yet this, too, appears to be smoke and mirrors.

Alan Joyce’s $5000 “gift” really a $5,000 grift. What’s the scam Qantas?

“The 2% only applies to years 3-5 of the latest period as the first two were subject to a wage freeze,” the Qantas source said. “That means it’s 2% for three out of five years, so only a 1.2% per year average.” With inflation running at 5-7% for several years, according to the Reserve Bank this week, this could mean real wages cut of 10% or more for Qantas employees.

It’s the well-paid, well-heeled board of Australia’s once mighty flag carrier that signs off on staff pay rises, people familiar with the company said.

So it’s little wonder that it appears to have gone missing as ruthless cost cutting by its chief executive has brought the company’s reputation among both customers and staff to its knees.

Directors relax in hand-seat class

The board sat on its hands as Joyce was busy sacking thousands of staff (illegally, according to the Federal Court) during the dark days of the pandemic. The aim, fair enough, was to lift the company’s share price from its $2.50 per share doldrums and it worked, to a point. Qantas shares closed at $4.48 on Friday. 

But now the chickens that Joyce hatched with his clever schemes, designed to please investors are coming home to roost with unprecedented staff and customer dissatisfaction.

The mass retrenchments coincided with the tightest labour market in Australia for decades, a situation that has been forecast for the past year – and which should have been appreciated by a board with plenty of company – if not airline – experience. This has left the company in tatters and in no shape to deal with the resumption of normal service in international and domestic travel.

Now, with the price of jet fuel having shot up 70% this year, and with cost pressure coming, ironically, from the draconian staff cuts and ensuing customer chaos lately, Qantas profitability is on the line.

Joyce carries imprimatur of the board

Joyce remains very much in charge, we can only presume with the full imprimatur of the board, despite untold reputation damage to the once gold-plated brand. Yet the buck stops at the board. Its directors have handed Joyce in the vicinity of $100 million during his 14-year tenure at the top of the company.

It has extended the gap between his potential long-term bonus, increased to 285% of his base pay from 135%, against 185% for senior executives, up from 95%. The size of that gap is something that remuneration experts say puts a roadblock on internal succession planning –  a key board performance indicator.

Perhaps this is because, like so many Australian “blue chip” monopolist and oligopolists, the Qantas board does not appear particularly fit for purpose with now only a solitary board member with any executive experience running an airline. 

It’s worth noting that Jetstar CEO Gareth Evans, who is seen as a leading successor to Joyce, today said he would quit the company once a replacement is found.

Taxpayers and shareholders scratching their heads as to where the $5 billion windfall Qantas received from the Morrison government during the pandemic went could take a look at the company’s board to whom several million dollars at least, was paid as the pandemic raged and Qantas all but shut down.

Pay rises for Qantas directors though

Qantas chairman Richard Goyder and his team gave themselves a pay rise in the 2020-21 financial year, with Goyder taking home a cool $560,000 and the non-executive board a cool, collective $2.4 million between them. Despite taking a quarter of no fees and “reduced” fees for another four months, Goyder’s pay was up 6.9% and the board collectively up 5.2%, coincidentally about the same as inflation at present and a 15% swing on the latest staff offer. Call it Board Keeper, if you like.

There’s nothing particularly unusual about the pay that the Qantas chair and board get. Major ASX companies all mark themselves against each other, so the stupendous payments to directors are self-fulfilling.

Yet the Qantas board contains little airline expertise by chairman and directors with far too much on their collective plates, including healthy Qantas share portfolios.

Goyder, like too many Australian company chairs, is a busy man. Too busy. He also chairs Australia largest energy miner, Woodside, where he picked up a handy $793,872 in FY2021. He also finds time to chair the body that runs Australia biggest football code, the Australian Football League, where he likes to keep executive and commissioner pay rates secret. In his spare time, he chairs the West Australian Symphony Orchestra.

Right now, Qantas is in the news daily, Woodside is front and centre of Australia’s energy crisis as well as a rising debate over climate change and fossil fuel companies. The AFL is frantically searching for a new chief executive – the biggest job in Australian sport – while the WASO is now playing to full houses once more.

If former Crown chair Helen Coonan was Australia’s busiest person leading up to the pandemic (she had six serious board and government roles as she presided over the ugly of James Packer controlled Crown which has its Sydney gambling licence pulled before selling to Blackstone) then surely Goyder is a warm favourite for 2022.

And it’s worth mentioning that Crown is just the latest (bad) exemplar here for Australian company directors. For all the malfeasance and reputational damage inflicted on the company on the back of serial state-based inquiries and royal commissions, not one of its directors has been held to any account except skipping away from the board, saddlebags stuffed with shareholders’ funds. So why would Qantas directors be particularly concerned about any potential consequences from the company’s illegal behaviour and other possible breaches of their duties?

Crown Resorts board: is Orange the New Black?

The lone Qantas board member with hands-on airline executive experience is now Tony Tyler, a long time executive of long-time Qantas rival and partner (it’s complicated) Cathay Pacific. It’s worth noting that Tyler has form in sacking staff in contravention of the rules; he was instrumental in the dismissal of 18 pilots while Cathay’s director of corporate development in 2001 who later won millions of HK dollars in compensation. 

He also has some intimate connections with two of Qantas’ major aircraft suppliers that some may see as conflicts. He is on the boards of Canadian aircraft maker Bombardier, which sells its Dash-8 planes to Qantas for its regional routes and BOC Aviation, the aircraft leasing arm of the Beijing-owned Bank of China which leases aircraft to Qantas.

Barbara Ward, who retired after 13 years on the board in 2021, was CEO of Ansett’s freight division in the 1990s, at least one life-time ago in corporate life.

Qantas’ token Gen X director is marketing executive Todd Sampson who also appears on the ABC’s Gruen program that picks through marketing and advertising. Surely he must be horrified at the spectacular brand damage that is being inflicted at present. Is he bringing his experience to bear in any way?

Filling out the board are some other busy people, although Qantas’ Annual Report in 2021 has ceased noting its directors other board positions. They are:

​​Corporate lawyer and former investment banker Maxine Brenner who is on the boards of Origin Energy Ltd Orica Limited and Growthpoint Properties Australia Ltd. She is a Member of the Council of the University of New South Wales and married to former One.Tel boss Jodee Rich.

Former telecommunications industry executive Jacqueline Hey once ran Swedish telco network maker Ericsson in Australia/New Zealand. She is the chairman of Adelaide and Bendigo Bank, on the board of the Commonwealth Superannuation Corporation and stepped down from the board of AGL this year.

Former Macquarie banker and serial ASX200 board member Belinda Hutchinson is also the long-time Chancellor of Sydney University, much reviled by the student body,  as well as the Australian chairman of global top 10 arms dealer Thales. She is the former chair of insurer QBE where she famously denied that climate change was the cause of increasing severe weather events.

John Howard’s former cabinet secretary Michael L’Estrange once headed conservative think-tank Menzies Institute and ran the Department of Foreign Affairs and Trade, also under Howard. He was on the Rio Tinto board from 2017-2021.

Like Ward, Paul Rayner retired from the board at the end of 2021 after 13 years and he and Ward have specifically not been replaced. Rayner, a long-time tobacco industry executive, is also chairman of Treasury Wines and on the board of Boral. 

As outlined above, the board suffers from drawing from a small, well connected mates club of Australian big company directors who skip from gig to gig, often leaving disaster in their wake, only to show up at the next well-paying board sinecure.

Qantas directors are also all loaded up, some very much so, with the company’s shares. Goyder leads current directors with 139,433 shares although the now retired Rayner had 305,362 shares that have risen more than $600,000 in value since Joyce’s staff and cost cutting lifted shares. This means that when the radical cost cutting measures, aimed squarely at staff were undertaken by Joyce, lifted the airline’s stock price. Qantas directors benefitted.

The Qantas 2021 annual report went to pains to note that Goyder and his team took one for the team, pausing their collection of board fees for three months from April 2020 and taking a 15% reduction (35% for Goyder) for another four months from July 2020. This compared to a two-year freeze for staff. And yet somehow directors fees still rose. 

If only the Qantas directors wanted the company’s much put upon staff to get the same pay boost as them.

Michael Sainsbury is a former China correspondent who has lived and worked across North, Southeast and South Asia for 11 years. Now based in regional Australia, he has more than 25 years’ experience writing about business, politics and human rights in Australia and the Indo-Pacific. He has worked for News Corp, Fairfax, Nikkei and a range of independent media outlets and has won multiple awards in Australia and Asia for his reporting. He is a fierce believer in the importance of independent media.

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