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Spirits of Australia soothe pandemic hangover as Alan Joyce hosts hangar party for Qantas’ 100th

by Michael Sainsbury | Mar 31, 2023 | Comment & Analysis, Latest Posts

The spirits of Australia will be flowing liberally tonight when Qantas chief executive Alan Joyce and chair Richard Goyder wine and dine 1200 corporate elites and titanium frequent flyers at the airline’s belated 100th birthday bash. Michael Sainsbury reports and checks out the race to succeed Joyce.

The Qantas centennial, three years late because of Covid, is imaginatively dubbed the ‘Next 100′. It is paid for in part by the largesse of the Australian taxpayer which tipped in to the tune of $2.7 billion to save the Roo’s skin in Australia’s biggest Covid corporate bail-out. Qantas shows no sign of any inclination to pay it back, as well as a fair chunk of the $800 million pandemic era flight credits that its customers are struggling to use because Qantas makes them so hard to claim.

It’s junior duopolist Virgin Australia is also in the champions’ league of corporate welfare merchants and customer credit hold-outs, although its service has not been so tarnished as has that of Qantas during these tumultuous years for airlines and the stewardship of Qantas chief executive Alan Joyce.

The corporate reward points are flowing again however, despite an aging aircraft fleet causing serial problems, and a low-cost carrier in Jetstar in serious disarray. Joyce is flying back to double digit millions in salary altitude as CEO.

Long a ‘darling of the sharemarket’ for union busting, Alan Joyce has already spiked the share price twice in the past 12 months with about $850 million in share buybacks whose attendant share price rises feed directly into both the short and long-term bonuses that have seen him as one of Australia’s highest paid executives, taking home at least $120 million during his tenure at the top by the end of this year.

TWU National Secretary Michael Kaine said the excessive celebration as Joyce set himself up for a lucrative exit was appalling:

It is an absolute kick in the guts to the current workforce and the 1700 illegally outsourced ground workers that Qantas management continues to pamper themselves with excessive corporate indulgence while they continue to suffer.

Of course, regular Qantas staff will be nowhere near the big corporate bash. Joyce has kicked his overworked engineers out of one of the airline’s hangars for a week as the bright lights and staging are put in place and preparations ramp up for the 100 year birthday where Kylie Minogue is strongly rumoured to be providing the entertainment.

Is it really Qantas’ party, or Alan’s? The event has a fairly strong whiff of the beginnings of a farewell lap by the Irish actuary (now a dual citizen) who has now been at the helm of the company for 15 years. Anyone with even a passing knowledge of good corporate governance will know that this is way too long for a person to be at the top of a listed company such as Qantas.

The party will be held in the same Mascot hangar that Joyce celebrated the group’s 90th year back in 2010 and where the company’s crushed 100th anniversary celebrations began in November 2019. The plan was to complete them here, with a big party a year later.

Instead, in November 2020, Joyce was sacking staff and convincing pliant treasurer Josh Frydenberg and then PM Scott Morrison to prop up the company. But unlike other airlines in places like New Zealand and Germany that had to either pay back government support payments or add their taxpayer to the share register, Qantas got off Scott free. If only Australia’s poorest being chased by the same government’s Robodebt scheme had been shown similar mercy.

Lufthansa paid back its debt, Qantas bought its own shares

There were other 100 years celebration initiatives from the Flying Roo’s ever creative marketing team. One of those that flopped before it even got out the door, was an anniversary board game – and really, you could not make this up – a Qantas version of the famous Parker Brothers game of greed, Monopoly. Indeed, 5,000 of these games with new special names for properties were created, only to be eventually pulped.

A game of Qantas Trivial Pursuit was then made as its replacement. We are told thousands of these intriguing sounding games are gathering dust in a large Qantas cupboard somewhere.

Who will replace Joyce?

While there have been so many rumour of Joyce’s departure over the past decade, it would be foolish to lay any cold hard cash on it happening this year. The board has said that he will stay until at least the end of 2023.

In what they claim is good corporate governance, Australian boards are fond of bleating about internal succession planning. In reality, this often turns into an ugly game of internal skulduggery. Qantas’ problem is twofold: Joyce has hung around so long that the prime candidates to succeed him keep changing and at present precisely none of them has any significant operational experience running an actual airline. That’s also true of the board, where only one of its members, former Cathay Pacific exec Tony Tyler has any airline experience.

The other issue is that management has stripped costs out of the company and screwed staff on wages and conditions, and passengers on inflight service. All to the point of cultural atrophy at Australia’s best known corporate institution. At the same time, they have spent very very little on new aircraft which are due to start arriving this year, which likely to increase operating costs. Hence, the profit high point has likely also passed for now.

Jetstar is similarly challenged. Not enough aircraft or engineers, and serious blunders weekly. It’s so bad that Alan Joyce is apparently furious and has been saying “we’re losing at operations, people,” to quote an insider. “No shit, Sherlock,” to quote passengers. But the party goes on.

It’s in this environment that fresh eyes from outside the company, any company, are most valuable.

In the ring to replace Joyce so far are chief financial officer Vanessa Hudson, who has worked her way up through the finance division to nab the top job there in 2019, Loyalty Division chief Olivia Wirth who has worked up from public relations staffer to Qantas C-Suite, and Jetstar CEO Stephanie Tully, another marketing exec promoted only last year, to the surprise of many.

Into the mix last month came Cam Wallace, who had a 19 year career with Air New Zealand until he quit in 2020 and spent almost three years at media company MediaWorks. Still, despite his long tenure at Air New Zealand, he too has had little direct operational experience except in cargo transport.

“Under Cam’s leadership, Air New Zealand’s passenger, cargo and loyalty revenues have experienced unparalleled growth over the past six years. He has been instrumental in developing new market opportunities, growing strategic alliance partnerships, expanding the loyalty footprint, and driving profitable growth throughout the airline’s business, ” Air New Zealand chief Greg Foran noted on his departure from the company.

For what it’s worth, company gossip has Hudson now leading the internal pack, a change from last year when many thought Wirth was in the lead.

And then there is former Jetstar chief Jane Hrdlicka who was picked to resuscitate Virgin Australia. So far customers, at least, think she’s doing a good job as the number two airline is creating hype around its plans for a stock market float. Alan and Jane spent plenty of time together at January’s Australian Open tennis (she’s the chair of tennis Australia and Qantas is a major sponsor).

Operational turbulence

Meanwhile, back in the real world, Qantas aging aircraft and much put upon customers continue to suffer. It’s usually Jetstar that cancels up to 20 flights a day, but in the past 24 hours it’s been Qantas’ main brand at fault with 10 flights, all between Australian mainland capital, canceled.

Unsurprisingly, all of these planes are the Qantas domestic workhorse 737. The problem is that these planes are now so old that their engine maker General Electric no longer makes engines for them. It was a 737 aircraft behind a rare January mayday call en route from Auckland to Sydney. An investigation into this is underway.

Qantas has previously told this writer that they have “sufficient engines for the life of Qantas’ fleet of B737s.”

But engineers have told MWM they are losing planes early each day having to send them back to engineering, a division struggling with not enough experienced staff and low level of spare parts.

“This then stuffs up the schedules for the day,” one engineer noted. The loss of a hangar for Joyce’s party may not be helping, either.

The Spirit of Australia, increasingly, is taking the piss, annoying customers by profiting from nosebleed ticket prices while angering staff with management’s notoriously aggressive industrial relations tactics. All will be forgotten this evening however as the corporate spirits rise.

Qantas shareholders re-Joyce, not taxpayers, passengers and staff

 

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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