Top 10 reasons why QF’s management structure requires immediate overhaul at the QF AGM Friday October 28:

1) At the close of trading on the date of the appointment of Leigh Clifford, the Qantas share price was $5.62

2) At the close of trading on the date of the appointment of Alan Joyce the Qantas share price was $3.43

3) The current share price sits at approximately $1.45

4) The company has incurred fines arising from unlawful cartel behavior which incurred fines (loss of revenue) in the absolute millions, while under the current management structure

5) Management has failed to develop cooperative working relationships with its labor force. Most recently this has led to a situation whereby 3 major groups of employees are engaging in industrial action against the company on several fronts, and agressive statements and actions have been levelled against Unions by management

6) New aircraft have been ordered but not delivered, and instead of using aircraft such as the Boeing 777 which competitors in and out of Australia and internationaly have used with great financial success, the company has illogicaly and unexplainably has adopted preferences which call into question management abilty

7) There have been numerous and inceased engine failures and a number of serious safety incidents under the current management structure

8) Readers Digest's 'Annual Most Trusted Brands Survey' has revealed that Qantas, once the most recognizable and trusted brand in the country, has fallen out of the top 40. A complete and thorough demise of reputation and service under the current management structure

9) All members of the board should be ousted due to their continued support and decision making processes that have contributed to QF now being in the untennable situation it is

10) The inability of the executive management group to handle manage, handle or deal with the ongoing industrial disputes which could yet continue for up to 18 more months

[Edited 2011-10-22 06:03:41]

Quoting jetfuel (Thread starter): 1) At the close of trading on the date of the appointment of Leigh Clifford, the Qantas share price was $5.62 2) At the close of trading on the date of the appointment of Alan Joyce the Qantas share price was $3.43 3) The current share price sits at approximately $1.45

The same is true for many airlines.

Quoting jetfuel (Thread starter): 4) The company has incurred fines arising from unlawful cartel behavior which incurred fines (loss of revenue) in the absolute millions, while under the current management structure

So have many major airlines.

Quoting jetfuel (Thread starter): 5) Management has failed to develop cooperative working relationships with its labor force.

Quoting jetfuel (Thread starter): 10) The inability of the executive management group to handle manage, handle or deal with the ongoing industrial disputes which could yet continue for up to 18 more months

No worse than BA, AC, US, AA, AFand others.

Quoting jetfuel (Thread starter): 6) New aircraft have been ordered but not delivered

Not QF's fault. Many airlines are suffering - NZ, AC ....

Quoting jetfuel (Thread starter): 7) There have been numerous and inceased engine failures and a number of serious safety incidents under the current management structure

I don't think any of these have been attributed to actions/inaction by the board.

Quoting jetfuel (Thread starter): 8) Readers Digest's 'Annual Most Trusted Brands Survey' has revealed that Qantas, once the most recognizable and trusted brand in the country, has fallen out of the top 40.

Who, exactly, did Readers Digest survey? Readers Digest readers?

Quoting jetfuel (Thread starter): 9) All members of the board should be ousted due to their continued support and decision making processes that have contributed to QF now being in the untennable situation it is

Why is the situation untenable, and what specific board decisions contributed to this?

No different at BA to be honest Mr!

Its not whether the staff or customers likes a management team but whether or not the fellow business community at large like it!!!

Cronyism!

I have to imagine that if the board gets ousted, all problems will be solved magically, The share price will triple, employees will get all the raises and job secutiry they ever dreamed off, Qantas will double its fares and market share at the same time. What an outstanding idea!

One key factor with Qantas is the influence they have over CASA. This resulted in the FAA nearly downgrading the safety rating of Australia in 2009. Some changes have been made since then so hopefully Qantas has seen some safety improvements, even though they would be pushed through against the boards immediate (short term) interests.

The United States considered freezing flights from Australia to the US due to the state of Australia's air safety system in 2009, a downgrade that normally only affects countries from the developing world.

In the cable released by wikileaks, the FAA told Australia's Civil Aviation Safety Authority that Australia could face a downgrade to ''Category 2'' due to a shortage of properly trained safety inspectors and too much delegation of CASA's regulatory function to carriers.
As quoted from the cable: ''A downgrade to Category 2 would be the worst-case scenario, which would entail measures such as freezing Australia-US flight operations to current levels and terminating code-sharing arrangements, such as the one between Qantas and American Airlines,'' ''CASA officials are not taking this possibility lightly and seem committed to resolve the shortcomings in order to avoid a downgrade.''

The findings resulted from a five-day safety audit by the FAA in late 2009, which found ''significant shortcomings'' in CASA's maintenance of the Australian aviation regulatory system.

http://www.smh.com.au/travel/travel-...-20110831-1jm4y.html#ixzz1WegHuDaD

[Edited 2011-10-22 08:57:33]

Quoting jetfuel (Thread starter): New aircraft have been ordered but not delivered, and instead of using aircraft such as the Boeing 777 which competitors in and out of Australia and internationaly have used with great financial success, the company has illogicaly and unexplainably has adopted preferences which call into question management abilty

LOL

If the 787's had arrived as promised (in 2008/2009 and ff), would the 777 even be a topic any more?

Do you understand how long it takes to obtain new aircraft? Particularly popular aircraft like the B777-300ER?

QF actually ordered further A330's in the years after its initial order in ca. 2003 in an attempt to fix this problem.

The B777 only rears its head in discussions on QF's ageing 744's; with the 380 slated to replace the 744 on the main trunk routes and the 330 and 787 to handle the medium-haul flying, why was the 777 needed?

There is a logic to the selection of aircraft, it's just that you can't see it.

QF does have its problems with the unions but this is not new and did not begin under the current board.

I personally think top-end management needs to be shaken up but the reasons you give aren't why.

You can start with the overly conservative approach it has taken. Whilst I concede that a conservative figure may have helped during the GFC, this conservative approach, ironically, exposed it to the weaknesses of the markets it sought to service (i.e. UK, USA traffic).

The maintenance issue - the unions are taking a risk with this as it appears that the problems QF have suffered of late are not limited to aircraft serviced offshore. What is even more compelling is that airlines that their aircraft serviced at the same workshops have not had a similar number of incidents experienced by QF.

I personally find the OP's list very considerable.


Yes, other multiple major airlines are having a lot of the same trouble, but nobody is going to find solutions looking at the other guy and making excuses. Qantas, AA, and BA are particular cases where things need to change if they want to survive, period. Somebody has to set an example for others to follow, and the podium is up for grabs.

Quoting Independence76 (Reply 7): Yes, other multiple major airlines are having a lot of the same trouble, but nobody is going to find solutions looking at the other guy and making excuses. Qantas, AA, and BA are particular cases where things need to change if they want to survive, period. Somebody has to set an example for others to follow, and the podium is up for grabs.

I agree, and QF have started to change their longer term vision, and on the surface it seems like a good and sensible move to allow QF to be more competitive again.

On the industrial relations front, it is difficult for unions to accept that their members are a prime cause for continued stress on the company, and without structural change, their continued actions will alienate them further, and will probably lead to job losses if it carries on much longer. They will not find equivalent pay and conditions outside of QF, so why do they continue to dig their own graves.

The shareholders will determine if the Board is not doing their jobs, and whilst it is true that some old school tie situations may exist on the Board, that does not mean that they do not work for QF's survival in today's climate.

Qantas has been hit hard by the liberal access granted by the Australian government to the Middle East airlines, its unions, Virgin Australia and no 777's.

Its one thing for the Aussie Government to get invaded by the Singapore, Cathay, Thai's and Malaysian's of the world but Emirates, Qatar and Etihad just breaks the kangaroos back. Under Ansett, QF owned the international market, with Virgin Australia its has Aussie comeptition with 777 to LAX. Unions in Australia would make the Eastern unions salivate, but they better learn from Eastern who died 20 years ago. 777 would have been great for QF to serve San Francisco and now DFW, a 777-300ER can fly farther then a 744ER, Cathay from JFK to HKG is all the evidence I need for that statement.

You have bugger all chance of the QF board being sacked and here is why.
Labour is of course ranting about the place and is disengaged so all kinds of crazy
gossip is going around atm.

But the reality of the situation is very different. Firstly pretty much across the board in western
societies their airlines shareprices aren't performing that well. For QF, to say that the GFC didn't happen,
that the huge mining export push hasn't push the value of the Aussie dollar excessively high (meaning less foreign
revenue plus it is at a disadvantage to its competitors cost wise pretty much in every market. the US carriers have lower costs, the Asian carriers, the middle east carriers, and even Air New Zealand. the only 2 i can possibly think of that might have higher costs are JAL (not a big market) and BA which its a joint operation anyway. So that kind of thing isn't gonna be enough to be the board down.

Next, institutional investors LIKE what QF is doing Asia. Right now in Asia there is a turf war about to happen. Just like in Europe, Ryanair and Easyjet grew out of nothing to be the to dominate LCC forces in the EU, in the Asia/pacific region a few brands are emerging, and it looks like Air Asia and Jetstar will be the two dominate forces. This, in the long run, will be refectled when the global economy improves more. QF staff don't see that. it's a million miles away from their everyday life. But fund managers, the institutional investors who pretty much control the majority of the voting stock at most airlines, do see that.

As for sacking the board. Not gonna happen. Those people are the darlings of the bankers and fund managers they know that effectively, through controlling huge chunks of the voting stock (in the 90%s) put them there. All I can say guys is get real and deal with it. Oh and the 777 would have been useful. But the -300ER, while very efficient isn't the magic bullet made out here, and the 744 still has CASM lower than the smaller 777-200. BA for example are still continuing on with theirs for some time too (otherwise you wouldn't have seen the new first installed in them). Particuarly the 777-200 10 or more years AGO! That could have kept places like SFO in the loop, and probably a few more european cities. But the Emirates hub is real and very very powerful. And it is my guess..that 787s will go to this RedQ thing and you're gonna see a few more options as a result of that. I can tell you right now, this board will still be here after this AGM for certain!

Quoting Lufthansa (Reply 10): But the reality of the situation is very different.

At last a dose of reality! All this is very true.

Quoting Lufthansa (Reply 10): Next, institutional investors LIKE what QF is doing Asia

Of course they do, so does the government's economic agencies.

Quoting Lufthansa (Reply 10): Right now in Asia there is a turf war about to happen. Just like in Europe, Ryanair and Easyjet grew out of nothing to be the to dominate LCC forces in the EU, in the Asia/pacific region a few brands are emerging, and it looks like Air Asia and Jetstar will be the two dominate forces.

So if we assume Air Asia get 45% of the Asian LCC market and JQ (Asia) 35%, that 35% is about 20 times the entire Australian economy and that doesn't count RedQ or whatever it's named.

Quoting Lufthansa (Reply 10): Oh and the 777 would have been useful. But the -300ER, while very efficient isn't the magic bullet made out here, and the 744 still has CASM lower than the smaller 777-200.

The B777 would not be ANY point of discussion IF Boeing & Airbus had met their contractual guarantees. Given that they didn't, the B77W would have been too little, too late for QF.

Gemuser

Quoting Lufthansa (Reply 10): I can tell you right now, this board will still be here after this AGM for certain!

We'll wait and see the outcome...

Hopefully there is a nice shake up of the board...

EK413

Quoting EK413 (Reply 12): Hopefully there is a nice shake up of the board...

Unless you have some information that the quote below is not correct, don't hold your breath!

Quoting Lufthansa (Reply 10): Next, institutional investors LIKE what QF is doing Asia.

QF Asian strategy is probably the best one there is for QF, given the Geo-political & economic realities of the world.

Gemuser

I think theres some who just expect that the Union actions will win and that the QF board should just bow to the pressure and give in to their demands. What a joke that would be. Thats gone on for too long as it is.

Unfortunately, the QF customers are left inconvenienced by actions taking place on all fronts.

Some of the current competitive issues stem from demands that have been met over the years. Its time that realistic thought went into these things by all parties, not just a game of greed and self interest. Its almost comical that the actions unions are taking today may actual cost more jobs at the airline in the longer term, which seems to be overlooked in the endless battles they are picking.

Quoting IndianicWorld (Reply 14): Its almost comical that the actions unions are taking today

The unions really are not doing much. Plenty of the noise is coming from Qantas too. The lies about grounding aircraft are merely that. Blatant lies claiming that a/c being pulled out of service for sale are due to unions.

Its a mess and the board has to be held largely responsible. Most of the board have no aviation expertise and have lost sight of the bigger picture. $500m profit , after paying fines from unlawful cartel behavior and in a weak economic time should be considered healthy.

All parties are to blame for the damage being done to the Qantas reputation, BUT the rott starts at the top

Quoting gemuser (Reply 13): Unless you have some information that the quote below is not correct, don't hold your breath!

I won't hold my breath... Freedom of speech and that what I feel QF need... A nice shake up...
It's taken the board 10 years to react...

Quoting IndianicWorld (Reply 14): I think theres some who just expect that the Union actions will win and that the QF board should just bow to the pressure and give in to their demands. What a joke that would be. Thats gone on for too long as it is.

No one is saying the board to give in to the Union demands... The board is also letting this go to far and should bring a decent deal to the table and get a move on...

EK413

Quoting IndianicWorld (Reply 14): Its almost comical that the actions unions are taking today may actual cost more jobs at the airline in the longer term, which seems to be overlooked in the endless battles they are picking.

Not to mention the greater impact it's having on the tourism industry. They're out to protect their own jobs, but at the expense of other peoples jobs.

Quoting jetfuel (Reply 15): All parties are to blame for the damage being done to the Qantas reputation, BUT the rott starts at the top

If you want to have a real impact, go out and buy as many QF shares as you can, since you point out they're cheap. Then, with the amount of voting rights you'll have, force an EGM to oust the board. If you can't afford to buy a huge percentage of the shares in Qantas, then obtain the shareholder register and write to them all suggesting that they should band together and oust the board. Whining about it here on the internet isn't going to solve squat.

Now that you've managed to oust the board, who are you going to replace them with?

Quoting jetfuel (Reply 15): $500m profit , after paying fines from unlawful cartel behavior and in a weak economic time should be considered health

That figure? How do we determine if that is a good profit or not? It sounds like a lot of money to the man on the street. but what did it take it terms of assets employed to get that figure? In other words, what is the return on investment. That is the important thing. That determines the health of a company. And I can tell you, it's not that impressive. Sure it is better than what some airlines are doing, but many airlines are almost terminally ill (AA for instance). I can tell you, it's roguhtly 20 Billion dollars worth of assets to make that $500 million. And the overwhelming majority of that 20 Billion isn't equity, it's debt. So that brings with it risk. risk that gives you about a 2.5% return on Assests. That, by any measure, is crap particularly when a term deposit in the bank will give you 5- 6%. Many airlines around the world are in this exact same position. When you only have fine margins, you can't afford not to address certain issues because there simply isn't much room for error. So, one department not making a profit, and pulling the others down, is the kind of situation that simply can't be left alone as it is. It must be addressed. And more importantly when your competitors enjoying unfair advantages and much lower costs bases are making aggressive moves, you need to move fast. Not merely wait until they have just about wiped you out before you react. To Stay ahead of the market and the game instead of playing catch up. That means change. And change is usually unpopular. But to sum up. This $500m profit, while seeming like a lot to the layman, when you look deeper, it's a long way from 'rolling in cash', as some people like to think.

Quoting Lufthansa (Reply 18): That figure? How do we determine if that is a good profit or not? It sounds like a lot of money to the man on the street. but what did it take it terms of assets employed to get that figure?

Compare it to the rest of the industry and you realise that for a relatively small player that's an excellent result in todays context. There are many airlines, all much bigger and stronger, who have made no profit, or very little compared with revenue or assets. Yes there are others such as CX and EK who are making billions, but as a whole QF's result is very good for this economy.

Anyway, having read all the arguments posed in this thread I find myself conflicted. I certainly agree that the current management and board have not done an excellent job over the past few years -- I think that they have lost sight of a lot of things that are a part of their brand and instead have become one of these profit manic companies that is focused on finding easy solutions that will bring in a profit at the end of this year.

Having said that I think that moving into Asia more is a strong strategy for seeking growth in the business, though it's hard to make judgement on that idea just yet since it's still up in the air and it's hard to know exactly what it entails. Bringing the dual brand (Premium and LCC) model to their Asian ops will be successful IMO.

Do I think that the board should be sacked and replaced? No. Do I think that they need to be more accountable, and maybe have some minor changes made (new Chairman, one or two new Directors maybe)? Yes.

It's all well and good using the economy, unions or whatever as excuses for poor leadership, but at the end of the day the buck lies with management and the board.

Qantas needs leadership. It has no leader and little direction. The airline and the CEO are clearly antagonising the workforce to the point that multiple unions are up in arms.

Whilst over at Virgin,the ex Qantas CEO and Virgin board have the entire staff backing. Virgin's morale is the opposite of Qantas.

I acknowledge that you cant replace an entire board. BUT a few new faces with some proper leadership qualities and a new CEO and you may well find an entirely different workforce attitude

Quoting jetfuel (Reply 15): The unions really are not doing much. Plenty of the noise is coming from Qantas too. The lies about grounding aircraft are merely that. Blatant lies claiming that a/c being pulled out of service for sale are due to unions.

Thats one opinion you may have but the truth can be very subjective it seems.

Quoting jetfuel (Reply 15): Its a mess and the board has to be held largely responsible. Most of the board have no aviation expertise and have lost sight of the bigger picture. $500m profit , after paying fines from unlawful cartel behavior and in a weak economic time should be considered healthy.

How many union leaders really understand economics? Judging by some of their comments and actions, I would guess not much. Maybe thats something you should be looking at, instead of pointing the finger solely at the board's knowledge of aviation.

Quoting jetfuel (Reply 15): All parties are to blame for the damage being done to the Qantas reputation, BUT the rott starts at the top

One could say that, many could say the opposite also.

[Edited 2011-10-22 20:35:01]

Quoting EK413 (Reply 16): No one is saying the board to give in to the Union demands... The board is also letting this go to far and should bring a decent deal to the table and get a move on...

Who says they havent tabled a decent offer already, only for it to be rejected?

Both parties need to sit down and work on this now, but militant actions wont help anyone in trying to get there.

bill142, he probably will replace them with a bunch of union leaders, as they seem to know the score apparently  

[Edited 2011-10-22 20:33:44]

Quoting IndianicWorld (Reply 21): Thats one opinion you may have but the truth can be very subjective it seems.

All opinions are subjective - some more than others including yours.

Quoting IndianicWorld (Reply 22): Who says they havent tabled a decent offer already, only for it to be rejected?

Who says they have ?

Quoting NTLDaz (Reply 23): All opinions are subjective - some more than others including yours.

And?? No one denied that already.

Quoting NTLDaz (Reply 23): Who says they have ?

Thats the thing, we just don't know. Saying that the airline isnt coming to the table is half the story is my point.

All we can go on are the actions and the demands that are reported on.

Quoting IndianicWorld (Reply 24): And?? No one denied that already.

There are 3 sides to every story. Your side, my side and the real side.

The board paid the CEO a 71% pay rise with that fall in stock value and $500m profit. So either the company is doing well or the board is negligent. I note no shareholder has seen a cent for over 3 years!

Quoting jfk777 (Reply 9): 777 would have been great for QF to serve San Francisco and now DFW, a 777-300ER can fly farther then a 744ER, Cathay from JFK to HKG is all the evidence I need for that statement.

  

Typical statement of someone who has not thought the whole issue through.

CX's flights HKG-JFK vv are polar, and are relatively unaffected by prevailing winds which affect the flightpaths taken by flights flying Australia-USA.

QF would have bought a fleet of 4x 77W (and maybe a spare so 5) to service 2 routes. Yeah right, that makes sense...

If Boeing had delivered 787's on-time, SFO would now be a 787-8 route and it is most likely it would have stayed and the 777 would be a moot topic.

Quoting jfk777 (Reply 9): Virgin Australia its has Aussie comeptition with 777 to LAX.

Such 77W's are higher capacity than QF 744's but in the premium cabins, a step lower (and priced accordingly) and heavily configured in Y. It's loads aren't generally that good - it's actually too much aircraft for VA at the moment. The 77L was the aircraft for them but alas...good CASM isn't much good if you can't fill the aircraft and take advantage of the CASM figures.

Quoting jetfuel (Reply 20): I acknowledge that you cant replace an entire board.

Then why did you in your initial post say:

Quoting jetfuel (Thread starter): 9) All members of the board should be ousted due to their continued support and decision making processes that have contributed to QF now being in the untennable situation it is

Backflip if I've ever seen one. It's reactionary and emotive.

It's obvious changes need to be made. But as I've stated, not for the reasons as articulated by the OP.

Quoting The Coachman (Reply 27): Backflip if I've ever seen one. It's reactionary and emotive. It's obvious changes need to be made. But as I've stated, not for the reasons as articulated by the OP.

No backflip at all. I said "I acknowledge that you cant replace an entire board." and perhaps I should have added "ät once"

There's way too much polarisation with this issue. Either people seem to want to blame the unions/pilots/staff or they want to blame the company. I will happily tell you I see fault on both parties, BUT ultimately it lies with the board to prevent this type of stand off. Secondly, the board has a responsibility to shareholders and that is clearly not being met.



Perhaps Senator Xenophon's speech of 23rd Aug to the Australian parliament will ad some perspective

Senator XENOPHON (South Australia) (19:37): I rise to speak tonight on an issue that is close to the hearts of many Australians, and that is the future of our national carrier, Qantas. At 90, Qantas is the world's oldest continuously running airline. It is an iconic Australian company. Its story is woven into the story of Australia and Australians have long taken pride in the service and safety standards provided by our national carrier. Who didn't feel a little proud when Dustin Hoffman uttered the immortal line in Rain Man, 'Qantas never crashed'?

While it is true that Qantas never crashes, the sad reality is that Qantas is being deliberately trashed by management in the pursuit of short-term profits and at the expense of its workers and passengers. For a long time, Qantas management has been pushing the line that Qantas international is losing money and that Jetstar is profitable. Tonight, it is imperative to expose those claims for the misinformation they are. The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden. In a moment, I will provide detailed allegations of cost-shifting that I have sourced from within the Qantas Group, and when you know the facts you quickly see a pattern. When there is a cost to be paid, Qantas pays it, and when there is a profit to be made, Jetstar makes it.

But first we need to ask ourselves: why? Why would management want Qantas to look unprofitable? Why would they want to hide the cost of a competing brand within their group, namely Jetstar, in amongst the costs faced by Qantas?

To understand that, you need to go back to the days when Qantas was being privatised. When Qantas was privatised the Qantas Sale Act 1992 imposed a number of conditions, which in turn created a number of problems for any management group that wanted to flog off parts of the business. Basically, Qantas has to maintain its principal place of operations here in Australia, but that does not stop management selling any subsidiaries, which brings us to Jetstar.

Qantas has systematically built up the low-cost carrier at the expense of the parent company. I have been provided with a significant number of examples where costs which should have been billed back to Jetstar have in fact been paid for by Qantas. These are practices that I believe Qantas and Jetstar management need to explain. For example, when Jetstar took over the Cairns-Darwin-Singapore route, replacing Qantas flights, a deal was struck that required Qantas to provide Jetstar with $6 million a year in revenue. Why? Why would one part of the business give up a profitable route like that and then be asked to pay for the privilege? Then there are other subsidies when it comes to freight. On every sector Jetstar operates an A330, Qantas pays $6,200 to $6,400 for freight space regardless of actual uplift. When you do the calculations, this turns out to be a small fortune. Based on 82 departures a week, that is nearly half-a-million dollars a week or $25½ million a year.

Then there are the arrangements within the airport gates. In Melbourne, for example, my information from inside the Qantas group is that Jetstar does not pay for any gates, but instead Qantas domestic is charged for the gates. My question for Qantas management is simple: are these arrangements replicated right around Australia and why is Qantas paying Jetstar's bills? Why does Qantas lease five check-in counters at Sydney Terminal 2, only to let Jetstar use one for free? It has been reported to me that there are other areas where Jetstar's costs magically become Qantas's costs. For example, Jetstar does not have a treasury department and has only one person in government affairs. I am told Qantas's legal department also does free work for Jetstar.

Then there is the area of disruption handling where flights are cancelled and people need to be rebooked. Here, insiders tell me, Qantas handles all rebookings and the traffic is all one way. It is extremely rare for a Qantas passenger to be rebooked on a Jetstar flight, but Jetstar passengers are regularly rebooked onto Qantas flights. I am informed that Jetstar never pays Qantas for the cost of those rebooked passengers and yet Jetstar gets to keep the revenue from the original bookings. This, I am told, is worth millions of dollars every year. So Jetstar gets the profit while Qantas bears the costs of carriage. It has also been reported to me that when Qantas provides an aircraft to Jetstar to cover an unserviceable plane, Jetstar does not pay for the use of this plane.

Yet another example relates to the Qantas Club. Jetstar passengers can and do use the Qantas Club but Jetstar does not pay for the cost of any of this. So is Qantas really losing money? Or is it profitable but simply losing money on paper because it is carrying so many costs incurred by Jetstar? We have been told by Qantas management that the changes that will effectively gut Qantas are necessary because Qantas international is losing money but, given the inside information I have just detailed, I would argue those claims need to be reassessed.

Indeed, given these extensive allegations of hidden costs, it would be foolish to take management's word that Qantas international is losing money. So why would Qantas want to make it look like Qantas international is losing money? Remember the failed 2007 private equity bid by the Allco Finance Group. It was rejected by shareholders, and thank goodness it was, for I am told that what we are seeing now is effectively a strategy of private equity sell-off by stealth.

Here is how it works. You have to keep Qantas flying to avoid breaching the Qantas Sale Act but that does not stop you from moving assets out of Qantas and putting them into an airline that you own but that is not controlled by the Qantas Sale Act. Then you work the figures to make it appear as though the international arm of Qantas is losing money. You use this to justify the slashing of jobs, maintenance standards and employment of foreign crews and, ultimately, the creation of an entirely new airlines to be based in Asia and which will not be called Qantas. The end result? Technically Qantas would still exist but it would end up a shell of its former self and the Qantas Group would end up with all these subsidiaries it can base overseas using poorly paid foreign crews with engineering and safety standards that do not match Australian standards. In time, if the Qantas Group wants to make a buck, they can flog these subsidiaries off for a tidy profit. Qantas management could pay the National Boys Choir and the Australian Girls’ Choir to run to the desert and sing about still calling Australia home, but people would not buy it. It is not just about feeling good about our national carrier—in times of trouble our national carrier plays a key strategic role. In an international emergency, in a time of war, a national carrier is required to freight resources and people around the country and around the world. Qantas also operates Qantas Defence Services, which conducts work for the RAAF. If Qantas is allowed to wither, who will meet these strategic needs?

I pay tribute to the 35,000 employees of the Qantas Group. At the forefront of the fight against the strategy of Qantas management have been the Qantas pilots, to whom millions of Australians have literally entrusted their lives. The Australian and International Pilots Association sees Qantas management strategy as a race to the bottom when it comes to service and safety. On 8 November last year, QF32 experienced a serious malfunction with the explosion of an engine on an A380 aircraft. In the wrong hands, that plane could have crashed. But it did not, in large part because the Qantas flight crew had been trained to exemplary world-class standards and knew how to cope with such a terrifying reality. I am deeply concerned that what is being pursued may well cause training levels to fall and that as a result safety standards in the Qantas Group may fall as well. AIPA pilots and the licensed aircraft engineers are not fighting for themselves; they are fighting for the Australian public. That is why I am deeply concerned about any action Qantas management may be considering taking against pilots who speak out in the public interest.

A lot of claims have been made about the financial state of Qantas international but given the information I have presented tonight, which has come from within the Qantas Group, I believe these claims by management are crying out for further serious forensic investigation. Qantas should not be allowed to face death by a thousand cuts—job cuts, route cuts, quality cuts, engineering cuts, wage cuts. None of this is acceptable and it must all be resisted for the sake of the pilots, the crews, the passengers and ultimately the future of our national carrier."

[Edited 2011-10-22 22:39:33]

Quoting jetfuel (Reply 28): I will happily tell you I see fault on both parties, BUT ultimately it lies with the board to prevent this type of stand off.

I take no side in this, but usually, a board supports the CEO during industrial disputes - because the board has previously approved the plans that have led to the disputes.

British Airways and its battles with Unite, as one of many examples.

A CEO does not act unilaterally, he has to have board approval for his plans for the airline.

Quoting jetfuel (Reply 28): Secondly, the board has a responsibility to shareholders and that is clearly not being met.

The board would probably argue that it is being met - that the battles will result in a more profitable airline, which is exactly in the shareholders interests.

mariner

Quoting mariner (Reply 29): Quoting jetfuel (Reply 28): Secondly, the board has a responsibility to shareholders and that is clearly not being met. The board would probably argue that it is being met - that the battles will result in a more profitable airline, which is exactly in the shareholders interests. mariner

Do you remember when the bid was on the table four years for an $11 billion takeover of the airline? Its now worth less than $3.5 billion. Back then the board was saying take it, take it....

I doubt there would be a Qantas left

Quoting IndianicWorld (Reply 21): Quoting jetfuel (Reply 15): All parties are to blame for the damage being done to the Qantas reputation, BUT the rott starts at the top One could say that, many could say the opposite also.

But there should be no doubt it is the task of management to make sure it doesn't get to a point where the it has measurable negative impact on the company.

Quoting jetfuel (Reply 26): The board paid the CEO a 71% pay rise

No they didn't.

Quoting jetfuel (Reply 30): Do you remember when the bid was on the table four years for an $11 billion takeover of the airline? Its now worth less than $3.5 billion. Back then the board was saying take it, take it.... I doubt there would be a Qantas left

Yes, I remember it well. It was surely a very good deal for the then shareholders.

I've no idea what would have happened if the bid had succeeded, but if you dislike this present management so much, maybe that management would have been better?

mariner

Quoting jetfuel (Reply 30): Do you remember when the bid was on the table four years for an $11 billion takeover of the airline? Its now worth less than $3.5 billion. Back then the board was saying take it, take it....

Well they were right then. If someone was offering $11Bn the shareholders should have accepted it, I bet those that scuttled the deal are feeling silly now. (You only get one Alan Bond to come along in your life)

Quoting jetfuel (Reply 20): Qantas needs leadership. It has no leader and little direction. The airline and the CEO are clearly antagonising the workforce to the point that multiple unions are up in arms. Whilst over at Virgin,the ex Qantas CEO and Virgin board have the entire staff backing. Virgin's morale is the opposite of Qantas. I acknowledge that you cant replace an entire board. BUT a few new faces with some proper leadership qualities and a new CEO and you may well find an entirely different workforce attitude

Totally agree, however unfortunately QF got rid of the face which could've and would've accomplished it...
The moral at QF has been on a slide for a while and by passing the CEO position to AJ this has just coursed the moral to worsen even further...
JB should've been handed the position... Unfortunately the board didn't see it that way...
My 0.02c...

Quoting IndianicWorld (Reply 22): Quoting EK413 (Reply 16): No one is saying the board to give in to the Union demands... The board is also letting this go to far and should bring a decent deal to the table and get a move on... Who says they havent tabled a decent offer already, only for it to be rejected? bill142, he probably will replace them with a bunch of union leaders, as they seem to know the score apparently

Would you accept 3% over 3 years and no back pay???

Quoting NTLDaz (Reply 23): Quoting IndianicWorld (Reply 22): Who says they havent tabled a decent offer already, only for it to be rejected? Who says they have ?

Exactly who says they have brought to the table a decent offer... They always try milk as much as possible from the staff...

Quoting jetfuel (Reply 26): The board paid the CEO a 71% pay rise with that fall in stock value and $500m profit. So either the company is doing well or the board is negligent. I note no shareholder has seen a cent for over 3 years!

And I'm one of those shareholder's still waiting to receive a cent...

EK413

Quoting Airvan00 (Reply 33): Well they were right then. If someone was offering $11Bn the shareholders should have accepted it, I bet those that scuttled the deal are feeling silly now. (You only get one Alan Bond to come along in your life)

It was a private equity deal. Odds on that if they had have taken it there would be no Qantas - or if there was it would be like Air New Zealand only surviving due to Government intervention, ie buying the airline. It was a deal built on shifting sands.

Quoting NTLDaz (Reply 35): It was a private equity deal. Odds on that if they had have taken it there would be no Qantas

Correct, but if someone offers something "over the odds" you take it. If you really want to invest in aviation you buy it back later at a cheaper price and pocket the difference.

Quoting NTLDaz (Reply 35): Odds on that if they had have taken it there would be no Qantas

Just curious the name of the company behind the Qantas takeover bid, was it Allco Finance Group - which has since collapsed... Yeah that's right
& I bet any GD would've walked away if QF collapsed...

EK413

Quoting Airvan00 (Reply 36): Correct, but if someone offers something "over the odds" you take it. If you really want to invest in aviation you buy it back later at a cheaper price and pocket the difference.

In the perfect world yes but you can't necessarily buy back something that no longer exists.

Quoting EK413 (Reply 37): Quoting NTLDaz (Reply 35): Odds on that if they had have taken it there would be no Qantas Just curious the name of the company behind the Qantas takeover bid, was it Allco Finance Group - which has since collapsed... Yeah that's right & I bet any GD would've walked away if QF collapsed... EK413

It was Airline Partners Australia , comprising Texas Pacific Group, Macquarie Bank, Allco Finance Group, Allco Equity Partners and Onex Corporation, was structured to comply with strict Australian ownership laws

Its an incestuous intertwined devious mechanism. Allco Finance Group is in liquidation but they did own or manage 54 commercial jet aircraft, plus another 40 on order, maily of course for Qantas. Allco Rquity to my knowledge went under as well.

[Edited 2011-10-23 00:14:55]

Quoting flyorski (Reply 5): The United States considered freezing flights from Australia to the US due to the state of Australia's air safety system in 2009, a downgrade that normally only affects countries from the developing world.

Shhhh. We do not want that mentioned!!

Quoting The Coachman (Reply 6): trunk routes and the 330 and 787 to handle the medium-haul flying, why was the 777 needed? There is a logic to the selection of aircraft, it's just that you can't see it.

   Although one begins to wonder if the overweight poorly engined 787s will ever do what was expected of them and as for the 789s, "what 789" is all one can say!!!

Quoting The Coachman (Reply 6): I personally think top-end management needs to be shaken up but the reasons you give aren't why.

   again. A management that wages such open war has a problem. Maybe the unions have a problem too, but no management should get itself so far out on a limb.

Quoting mariner (Reply 32): but if you dislike this present management so much, maybe that management would have been better?

Well I am not sure of much, but I am pretty sure you don't think it would have been Mariner. A bunch of chancers that probably would have made Joyce look like perfection. Aside from the fact that at least one of the major partners collapsed, the rest were probably at best of doubtful probity????

Quoting NTLDaz (Reply 38): In the perfect world yes but you can't necessarily buy back something that no longer exists.

Yes, Qantas might no longer have existed, but if there was a demand for domestic air transport someone would have stepped in and filled the void. As regards international operations, the government long ago decided, it was better for the consumer, not to protect Qantas, hence the almost unrestricted granting of traffic rights to foreign operators.



Edit: grammar

[Edited 2011-10-23 00:29:49]

Quoting Baroque (Reply 40): Well I am not sure of much, but I am pretty sure you don't think it would have been Mariner.

You're right, I don't think it would have been better. I suspect there would have been a deal of asset stripping.

The paradox is that the problem is the free market. It attracts a bunch of pirates - buccaneer financiers out to make the big bucks quickly, not to run an airline.

Quoting Baroque (Reply 40): Aside from the fact that at least one of the major partners collapsed, the rest were probably at best of doubtful probity????

Well, since Macquarie Bank was one of them, you might think that, but I couldn't possibly comment.  

It's not so much the probity, it is the intention. Macquarie is about making money - it's a bank. David Bonderman, at TPG, is about making David Bonderman even richer.

Bonderman (TPG) was a major player in the turnaround at Continental Airlines, but he was also the person who forced the (legendary) CEO, Gordon Bethune, to resign.

Such men do not have small egos.

mariner

Quoting Independence76 (Reply 7): Yes, other multiple major airlines are having a lot of the same trouble

But year after year Qantas are still making profits, I know the US airlines are losing money hand over fist but QF turns a profit every year and they still cry poor.

Quoting mariner (Reply 42): Quoting Baroque (Reply 40): Aside from the fact that at least one of the major partners collapsed, the rest were probably at best of doubtful probity???? Well, since Macquarie Bank was one of them, you might think that, but I couldn't possibly comment.

Thank you Francis (Urquhart for those who think that is Mariner's name)! 

Well M Airports is not one of the most popular topics for those who visit Sydney airport, not that MAP is the same as M Bank. But the millionaires factory is not in general popular round here - except of course with those it happens to make millionaires I suppose.

I am trying to think of something that Mac Bank has put its mind to that is popular, must be lack of imagination, but nothing has come to mind so far!!

Quoting mariner (Reply 42): it's a bank.

Not your average bank however!

Quoting The Coachman (Reply 27): ting jfk777 (Reply 9): 777 would have been great for QF to serve San Francisco and now DFW, a 777-300ER can fly farther then a 744ER, Cathay from JFK to HKG is all the evidence I need for that statement. Typical statement of someone who has not thought the whole issue through. CX's flights HKG-JFK vv are polar, and are relatively unaffected by prevailing winds which affect the flightpaths taken by flights flying Australia-USA. QF would have bought a fleet of 4x 77W (and maybe a spare so 5) to service 2 routes. Yeah right, that makes sense... If Boeing had delivered 787's on-time, SFO would now be a 787-8 route and it is most likely it would have stayed and the 777 would be a moot topic.

IF Qantas had 77W's it could fly to more destinations, a small fleet would NOT make sense but 15 planes would. There are more places in the USA beyond LAX, DFW and SFO for QF to fly to.

Quoting Flyingsottsman (Reply 43): But year after year Qantas are still making profits, I know the US airlines are losing money hand over fist but QF turns a profit every year and they still cry poor.

Very well said...

 

Profit after profit you hear the same rubbish coming out of the CEO's mouth... All a load of B.S...

EK413

Quoting jfk777 (Reply 45): IF Qantas had 77W's it could fly to more destinations, a small fleet would NOT make sense but 15 planes would. There are more places in the USA beyond LAX, DFW and SFO for QF to fly to.

If the 787 had arrived as envisioned they could have done that and more, more efficient.

Quoting Baroque (Reply 40): Although one begins to wonder if the overweight poorly engined 787s will ever do what was expected of them and as for the 789s, "what 789" is all one can say!!!

Gee, why would you say that, when engine pips are scheduled and it is known that the weight issue will be addressed fully by LN 90 IIRC. Also, all I have read on the 789, is that it has no weight issues and will likely exceed spec. Sure the plane is late but it will get there and it will perform at least as expected.

Quoting qfa787380 (Reply 48): Also, all I have read on the 789, is that it has no weight issues and will likely exceed spec. Sure the plane is late but it will get there and it will perform at least as expected.

I'm sure Air New Zealand would be pleased to hear because, presently, it has a different view:

http://www.centreforaviation.com/blo...isit-auckland-12-14-november-60825

"Under the 787's original specifications, reaching Brazil's Sao Paulo non-stop from New Zealand would have been very tight. With additional weight now expected to be on the aircraft, as well as performance shortfalls, Mr Fyfe said in Singapore earlier this month the 787-9 can no longer fly non-stop, or at least not without payload restrictions that make the route non-viable. The carrier is evaluating a stopover in Tahiti en route to Sau Paulo."

mariner

I think the point is the big 787 delay screwed over a lot of airlines including QF. The Australian Senator's speech however had some bombs sprinkled in the text. If those allegations prove out, I hope the Aussie govt and/or regulators take action.