Source : THE AGE NEWS
Alan Joyce’s reign at Qantas has a distinct buy-now-pay-later (BNPL) feel to it. The fallout from his tenure has already stung the airline a couple of times, and just how painful the final instalment may be is in the hands of the Federal Court.
It has been 20 months since Joyce quit the airline and removed himself from the metaphoric centre of the customer dartboard, but his legacy has a long tail.
The man once hailed by the airline’s chairman as the best chief executive in Australia, and certainly one of its most highly paid, left a series of messes for successor Vanessa Hudson to clean up.
Qantas boss Vanessa Hudson would be keen to put a full stop on Joyce’s legacy at the airline.Credit: Bloomberg
Hudson, to her credit, has so far managed to see through most of the dramas and will have to wait to hear from the Federal Court this week on how large a penalty Qantas will need to pay for illegally outsourcing 1800 ground-handlers in 2020 during the pandemic.
The maximum fine is $121 million, which would come on top of the $120 million compensation scheme settlement Qantas reached last year with the unions to reflect the economic hurt and suffering endured by sacked employees.
Add those numbers to the $120 million Qantas forked out last year to put the embarrassing ghost flight episode, in which the airline sold tickets on flights that had been cancelled, and you have a decent chunk of change flying out of the airline’s coffers.
Every one of the financial penalties is a reminder of an old Qantas that new Qantas, under Hudson, would rather forget.
If the federal court this week penalises Qantas the full $121 million for sacking the staff, then the total cost of the clean-up could be more than $360 million. Qantas was also pressured into refunding cash or lifting the sunset clause on more than $500 million of its COVID credits after a backlash from customers who complained redemptions were exceedingly difficult to navigate.
Every one of the financial penalties is a reminder of an old Qantas that new Qantas, under Hudson, would rather forget. Hudson may not baulk at the $121 million figure if it means putting a full stop on Joyce’s legacy and getting that particular chapter of the airline’s history behind it.
That’s not to say that the new Qantas has completely rid itself of all the nasty baggage, but the airline’s net promoter scores have improved, alongside the on-time performance of flights, access to customer service representatives and passenger luggage showing up on time.
Qantas is also making the most of an earnings sweet spot and share price boom thanks to Australians shrugging off the cost of living crisis to travel.
While a number of large US airlines have pulled their earnings forecasts for the year ahead, Hudson was quite upbeat at a recent investment conference in which she cited the sluggish oil price and an improved currency position, moving in Qantas’ favour.
Despite the reluctance of some travellers to fly to the US (the US government’s International Trade Administration said Australian visitations were down around 7 per cent in March), Qantas maintains it has not shown up in forward bookings.
The good news for Australian travellers is that both of our major airlines appear to be in robust good health. Qantas’ share price has taken off by 68 per cent over the past year – and its success has opened the door for Virgin Australia to take the leap and list on the ASX.
There is no industry with a history like the airlines in having to deal with external shocks. Credit: Matt Willis
Virgin’s private equity owner, Bain Capital, has been pawing the ground for two years with its finger poised over the “go” button on for an IPO. It had appeared to have settled on next month following the appointment of a new chief executive and completion of a deal to have Qatar Airways take a 25 per cent foundational stake.
But dislocation of world markets caused by Donald Trump’s moveable trade feast has introduced some risk for any company looking to join public markets. Sure, the markets have settled over the past week since the US and the Chinese governments appear to have started negotiations. But when it comes to Trump, investors have come to expect the unexpected.
That said, there is no industry with a history like the airlines in having to deal with external shocks. From 9/11 to SARS to COVID, there have been plenty of hair-raising moments airlines have needed to endure.
Trump is just the latest in a long list, and Virgin’s owner is better off picking a date and sticking to it.
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