Qantas offers excuses for $2.8 billion loss
WHEN Alan Joyce took over as chief executive at Qantas in 2009, he did so with rowdy praise. He was the wunderkind, the fast-talker from Dublin who had been instrumental in getting Jetstar off the ground and was going to revolutionise our national carrier.
In 2009 Qantas recorded a profit of $213 million, way down on the $970 million they made in 2008 when staff were rewarded with a $1000 cash bonus, or the $719 million that filled coffers in 2007.
Incidentally, 2009 is also the last time Qantas paid out dividends to shareholders.
Since then, the airline has cut its fleet from 188 planes to 122 and its workforce by more than 5000 with 2800 more people scheduled to go, as it attempts to stay afloat in what it says is a very competitive market.
Yesterday's news that Qantas would report a $2.8 billion loss was only surprising in the depressing nature of that figure.
Once again, the airline intimated high fuel costs, international competition and legislation that favours overseas owners were reasons for its declining performance.
There were some new excuses too - the cumulative effect of two years of market capacity growth outstripping demand, lower consumer confidence and as well costs associated with streamlining operations.
There was, however, no mention of the deal with Emirates, touted last year as a big money spinner for Qantas but which has, in fact, failed to materialise with the Dubai-based carrier the primary recipient of resultant passenger numbers.
Six years since he first took the helm, Mr Joyce remains optimistic and insisted yesterday that Qantas "has come through the worst", adding that splitting the international arm from the domestic flyer would help them return to profitability in the first half of next year.
This optimism was echoed in the stock market with Qantas shares opening at their highest since June 11, and the airline's biggest shareholder, US-based Franklin Resources, increasing its stake this year to 18.7% from 17.5%.
Mr Joyce, however, has more detractors than supporters with critics pointing to his excellent wage packet with eye-popping bonuses, even in years when Qantas has floundered.
"Joyce has earned $22.2 million as chief executive and in the 2012-13 financial year his $5.1 million package matches the combined salaries of the Cathay, Singapore and Air New Zealand chiefs. Shareholder value seems inversely proportional to Joyce's pay packet. Qantas shares today are worth 40% less than when Joyce took over," said Independent Senator Nick Xenophon in a newspaper column yesterday.
Professor of Economics at RMIT University, Sinclair Davidson, believes that Qantas has to do more than just cut costs. It has to re-engage with customers and rid itself of senior management.
"Cost-cutting doesn't fix the challenge Qantas faces in generating paying customers and then repeat business," he said.
"Senior management has to go. That means Alan Joyce and the board. Qantas management have the obligation to manage the business in that complex dynamic environment and are ultimately responsible for Qantas' current predicament."