Joyce’s next stunt? Will it be a Qantas receivership?
After being responsible for the latest “we could go under” lobbying that Qantas is making in Canberra to get the government to compromise Australia’s free trade credentials to protect an airline that has been tragically and persistently mismanaged, the next stunt pulled by its CEO Alan Joyce could be filing for receivership for the about to become separately managed loss making international division.
This is not as extreme a prediction as it might at first glance appear.
Joyce’s habit of behaving like he suffers from an attention deficit disorder makes it relevant to highlight the dots, connect them and ask, where do they point?
Such as ambushing his own passengers with a totally unnecessary grounding of the airline, he insists on his own personal whim on the last Saturday morning of last October, or tying up NSW Police resources, but with no result, after alleged death threats earlier in the year, or announcing an Asia initiative that included doing ridiculous things to A320s majority owned by Asia partners, not yet known, in a country not yet determined, in order to set up a premium single aisle carrier to rip customers from the clutches of Singapore Airlines, Cathay Pacific and everyone else, who were supposedly ripe for the picking.
That initiative, which authorities in the relevant target companies said they knew nothing about, was launched over the top of all of the accepted protocols of doing business in Asia, and it came to nothing.
The so called Red Q project pulled the same big zero that applies to dividends for Qantas shareholders. The same broken logic that says that by cutting back Qantas international until it can make money Qantas international can then re-expand, which is absurd.
Every time Qantas retreats on international routes it creates a vacuum that other carriers fill, and which in all probability, it can never reclaim. And it certainly can’t reclaim them by diverting money from an Asia based entity in which it would have minority equity in order to revisit activities on which it failed, three or five or however many years earlier.
The details disclosed for the Asia project were absurb. There is a difference between stating the blinding obvious about growth potential in Asia and coming up with a patient, sensible, well researched project which the intended hosts or partners do not read about first in the English language media of another country that shouts “Make way, coming through.”
The rhetoric in the anti-Etihad lobbying presentation quoted by the Fairfax media report continues a fundamental dishonesty in the long tradition of Qantas management attacks on internal and external competitors, in that his predecessor Geoff Dixon used all the same tired phrases against Singapore Airlines when it was trying to buy 49% of Ansett owner, Air New Zealand, in 2001, only to later crawl to the Singaporeans to do a merger deal with Qantas. That charm offensive failed. But Dixon was unaware as it turned out that the most damaging thing Qantas could have done to Singapore Airlines was stand aside and let it blow torch itself by sinking its fortunes, without recoverable trace, in the Air NZ/Ansett disaster that overtook that group two days after 9/11.
Something similar may have happened recently in relation to Emirates. An immense amount of hype, including polite noises from Emirates about getting closer maybe, accompanied leaks by allegedly well connected Qantas sources, about a deal with the Dubai based carrier ranging from it taking 25% equity in Qantas to ho-hum codesharing.
Like Red Q, and the death threats, this came to nothing, after which Qantas appears to have suddenly remembered it needed to make a very late profit down grade disclosure to the ASX, and the Qantas share price dived over a cliff.
While this situation unravelled for shareholders, Joyce resorting to announcing a capacity and fare war with Virgin Australia, which outgrew every other airline in Australia in domestic traffic in April. Those figures imply that had Tiger not been grounded in 2011 and kept on a short chain this year, Jetstar would not have grown enough to keep Qantas as a group on the dry side of its 65% domestic market share line in the sand. In fact, if the figures for Skywest were included, and that airline is expanding a commercial relationship with Virgin Australia, the line in the sand has been washed away already.
There is no doubt Joyce knows the dot points as to Qantas weaknesses and potential new strategies, but there are abundant and painfully costly reasons to believe that he is incapable of engaging his staff and delivering on opportunities in Asia or further afield.
Asking the political parties to rescue Qantas from its own errors, at significant cost to Australia’s national economic interests, is a more than a bit rich.
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Ben, a few points:
1) there will be no legal separation of QF domestic and international, even after the separation of the businesses.
2) receivership is a creditors’ process, not one one which a debtor can enter into of its own accord. QF International does not have separate creditors to QF Domestic – they are the same company. QF International alone could not be put into receivership; it could only happen to the company as a whole if its creditors decide to do so – and there’s no suggestion of that. To refer to “receivership” is misleading.
3) Administration is another form of insolvency administration. It is, in most circumstances, a debtors’ process which is only available if management determines that the debtor is insolvent. However, the Corporations Act does not contemplate treating different business units of a single company as different entities for the purpose of administration. Thus, it would not be possible for QF International to be put into administration without QF in its entirety being put into administration. And that won’t happen unless the business as a whole is insolvent.
Please, a little more precision and perhaps a little less re-treading old ground would be appreciated. For example, you often insinuate that the death threats were a fabrication. We know your views, but the very fact that police have not proceeded with an investigation is no evidence of that fact. Unless you can bring something new to the table, maybe we can drop the subject?
Rufus,
What then happened to Ansett when it was cut loose by Air New Zealand, and who appointed the receivers?
The death threats claims led to the diversion of police resources into a special investigation, announced by the Premier Barry O’Farrell. I have repeatedly asked for accountability as to that inquiry, and its discontinuation, which according to the SMH was at the request of the company.
This is is public money. If you or I caused a police inquiry which lead to a nil result, after going on air to declaim in vivid language, the threats that had been made to me or my company, we might well be charged under the Crimes Act.
It is not an issue which can be dropped until there is a line by line reconciliation between what the CEO of Qantas said, and the reasons for the police not proceeding.
Let’s go for the novelty of insisting that the law and responsbilities under the law being equally enforced across our society.
Many a mere mortal and pleb have been charged and convicted after making false reports to police. Airline executives appear to be immune. I applaud Crikey / Plane Talking for continuing to dig for information about that incident.
Joyce’s ongoing pranks and stunts worry me, as I fear it could result in more disruption to Qantas passengers. He did it once, so he could do it again. The latest prank is creating shock media headlines that Qantas might, quote, “Go Under”. My impression is that Joyce is a loose canon firing, and we don’t know which direction he might fire next.
I hope Alan, the Chairman and the Board (along with those staff who were happy to dance on Ansett’s grave) believe in karma! And to channel Earl Hickey:
So, I made a list of everything bad I’ve ever done and, one by one I’m going to make up for all my mistakes. I’m just trying to be a better person. My name is Alan.
Joyce is just another businessman who pulls stunts to try to get political support for a failing business. What he is telling us is that we should support Qantas, because it’s an Aussie airline, flying the Aussie brand to the world, employing Aussies, taking Aussies to where they want to go. And if the customers don’t support the business, then the Government should step in and do something about it as a patriotic duty.
It’s a BUSINESS. The nature of the competitive market is that some businesses grow and others shrink, some businesses fail and new one start up. Of course, the response from Joyce etc is that they are great managers leading great businesses, but the market is stacked against them ie. they are Aussie battlers just like you and me. Well, that’s the way the world is, it’s not going to change in a hurry so they should either adapt or stand aside for another company that can make a go of it.
I’m always amazed at businessmen who claim to love the capitalist, market based system right up to the point where the market tells them their business is doomed.
Mr Joyce could perhaps follow the example of Eva Air of Taiwan and give Qantas planes the “Hello Kitty” treatment. It seems to be bringing in the customers! There are some cute photos in the article.
http://www.cnngo.com/explorations/life/eva-air-does-its-best-new-hello-kitty-jets-623405?hpt=hp_bn5
It’s a stupid thing for Joyce to say. Why would you consider booking with QF for, say, a December trip, if the the airline might “go under”?
You’d avoid it like the plague. The man is a buffoon, talking down Qantas and making shareholders and potential travellers nervous.
It seems, however, that the big institutional investors all love him (or are all on each other’s boards) as no-one seems to take any action even after a lengthy period of non-payment of dividends, shrinking profits, late statements to ASX etc.
As Cromwell once said:
It’s difficult to quite find the right words, to express the full extent of one’s disdain for the performance of joyce & the cadre he represents. The full extent of their commercial & operational ineptitude will probably only be fully appreciated on a look back basis. That might be a case of stating the bleedin obvious but only in the future for instance,will the full story be told of the degree to which Jetstar’s performance has been misrepresented.
Stunt after costly stunt cannot continue to mask that the priority of this management group, has been to peruse an industrial ideology at the sake of addressing the array of daunting challenges that aviation esoterically represents.
This management has failed the Australian community but I especially feel for the thousands of highly motivated Qantas employees who have been betrayed by the incompetence & abject deviousness of their management. It’s akin to having a monkey ride your thoroughbred.
I think that Joyce must be “losing it” to draw such a long bow; if indeed he did make the statement re Etihad and Virgin.
I have however to echo “Rufus’s sentiments about your article. You could have made a pretty could good case without all the irrelevant baggage and imbellished exaggeration.
Let’s forget this constant mention of death threats etc. It’s irreleveant and it demeans you Ben. Let’s stick to the real stuff; which you sometimes do and when you do it is good stuff.
In regards to Ansett and Air New Zealand I believe that Rufus is still right. I am not an expert on the matter but I understand that Air New Zealand board brought in administrator as “the group” was insolvent. This included both Air New Zealand and Ansett. However, when under administration they were able to separate the two businesses where one had the potential to be a going concern, which was Air New Zealand, and the government of NZ basically bought Air NZ from the administrator (staff, assetts, debt etc) and noone bought Ansett so it was subsequently liquidated and assetts sold etc.
There were those that were critical of severing Air NZ like it was and leaving them relatively unscathed (still severely wounded mind you) and bundling everything bad on to Ansett which I understand was still at that stage a separate entity, but a realated body corporate (subsidiary) of Air NZ.
And Ben, What is all this clap trap about Dixon and Singapore Airlines and Ansett. Qantas had no influence on Singapore Airlines not buying half of Ansett as they initially intended.
You know that, so why make such a statement in this tirade about Qantas.
News Corp had set it up under Rod Edington (a News employee, not an Ansett employee I understand) so that its 50% stake in Ansett was to be sold to Singapore Airlines and there were no regulatory hurdles to this. But Air NZ had the first right of refusal to buy they remaining 50% of Ansett (they had previously bought TNT’s 50% stake; and that is a story in itself) and they foolishly exercised the option.
They bought a company twice as big as itself and with real problems after it had been savaged by a Qantas that had finally gotten its act together as well as Virgin and Impulse.
I knew the senior execs at Qantas at the time and I assure you that it came as a real surprise to them when Ansett fell over. They knew that Ansett was in trouble but not to the extent that it would fall over. What they had their eyes on at the time was the undercapitalised Virgin who was at the time really suffering and who they believed would fall over late October. Anyway, instead Ansett fell over in September and the rest is history.
Virgin fell into such a vacuum where even Mickey Mouse could have driven them to success; which by inuendo is probably a pretty good assessment of Virgin’s performance in its early tears after Ansett as they provided negligible competition to Qantas until Borghetti took over the reigns.
Mr Banjo
Why do you continue to make such inaccurate statements about Jetstar’s performance.
From reading your recent contributions I know that you are genuinely concerned about Qantas (and quite rightly so) but I also believe for your own reasons you are perhaps indulging yourself in what seems to be a combination of both wishful thinking and conspiracy theory.
Qantas problems are indeed real, but Jetstar is not one of its problems; in fact to the contrary.
Postman,
On the night that Air NZ severed its relation with Ansett we kept the presses on hold at the Australian Financial Review. The administration of Ansett was not initiated until more than a day later, in Australia. The administration was subsequently replaced by what became Korda Metha, and I invited Rufus to explain to us how this happened, since he seems quick to make a criticism which when he does the hard work, will provide him with the real sequence of events, and also serve as a reminder that there doesn’t appear to be any mechanism that would prevent hypothetically something similar occurring in a company based entirely in Australia, other than a race to the courts by Commonwealth law officers seeking urgent injunctions.
There was a huge amount of commentary generated in legal circles by the disavowal of Ansett by Air NZ, and I’d like Rufus to go swim in the same seas that I did at the time.
Turning to Dixon and Singapore Airlines. I commend the coverage in the daily papers at the time, some of it from myself, concerning the talks that Dixon engaged in with Singapore Airlines in May 2001 during which he pleaded the proposal that Air NZ sell all of Ansett to Singapore Airlines and quit its stake in the Kiwi carrier that Qantas might then pick up, to avoid what he and Peter Gregg often referred to as the formation of a behemoth.
Like a number of my colleagues, I went to Singapore several times during that phase for some very interesting public briefings by Singapore Airlines on how it wasn’t any of Qantas’s businesses as to what it bought or sold from whom. But with the hindsight of what happened later that year, neither Singapore Airline nor Qantas had any real notion as to how serious the situation at Ansett had become. I recall getting a prominent led story in the AFR quoting Cheong Choon Kong, then the CEO of Singapore Airlines, in the middle of the year, saying that ‘Ansett could go broke’. Cheong was resigned at that stage to a bloody and costly restructuring of Ansett, but if he didn’t get his way, whereas in fact, had he known what Dixon said he he didn’t discover until much later, he would have probably withdrawn from any Ansett plans at all and enthusiastically sold the ANZ stake to Qantas, which in turn to satisfy the ACCC, would have then received the poisoned chalice of having to try to find a buyer for Ansett.
The course of events in the Ansett saga in 2001 were quite torturous and difficult I found to follow, so I retained extensive notes and library files from that time and the benefit of a very small part of that record can be found in the Ansett files behind the blue button on the right.
I do not accept your points about the death threats at all, but of course, I respect your views and well argued concerns.
Here is the bit I dont get. One of the ostensible justifications for Qantas seeking to end the protected industrial action was the potential effect on forward bookings that the mere possibility for industrial action was having. Apparently, this uncertainty and its attendant financial consequnces was severe enough, alongside other specious arguments, to justify grounding the airline, throwing a major hissy fit, and terminating lawfully protected industrial action in favour of arbitration.
The usual right wing types lauded Joyce for his strength, foresight etc etc in not letting union action continue to in their eyes undermine the health of the business.
However, it seems that the CEO of his own volition and without factual basis raising the spectre of the airline “going under”, is ok, even though that is even more likely I would have thought to lead to people questioning the wisdom of booking long term travel with Qantas. No doubt the same right wing types will laud Joyce for his perspicacity and bemoan the outrageous but strangely difficult to quantify subsidies being given to Edihad/Emirates/Qatar/anyone foreign and regurgitate the same old same old.
I think this goes to show two things.
1. To me its pretty simple. A CEO doing this should be shown the door, no questions asked. Credibility Zero. This does not need to be complicated.
2. Ideology trumps analysis, and never more so in the coverage of Qantas.
For those who can remember back further than the last subterfuge stunt,
….while Ansett continued on, with very little change to their business model, thousands of QANTAS staff were jumping the the flaming hoop of a Competitve Tendering process (you know, where you bid for a job you already hold). Ansett was a great airline with dedicated staff, run by d*ckheads too concerned with their own gains ( much like the QANTAS of today ).
I have no idea where Joyce is taking QANTAS, but his schizophrenic management style is a serious problem worthy of a professional assessment.
Whilst the SMH report is interesting I find the online poll that goes with it even more significant. At this stage 53% of those polled give QF as their first choice of airline, with Virgin picking up 40 %. Tiger comes in at 4% with Jetstar getting just 3%. It’s a bit like an American presidential poll: any airline except Jetstar. How much longer can Mr Joyce ignore the punters? How much longer can the Board sit on their hands? Cromwell was right.
There is a very, very simple explanation for how Air NZ could cut Ansett loose, while QF Domestic could not appoint “receivers (sic)” to QF International: Air NZ and Ansett were separate companies. Qantas Domestic and International are not. You cannot get past that point unless there is a legal separation of the two, which QF has explicitly said will not happen. However dramatic the Ansett situation, the legal basis is different and cannot be compared.
OK – we can split hairs and say various operating entities are different (ie Jetstar and various QantasLink subs), but Qantas mainline is not.
Meanwhile, the death threats issue – it is not an offence, or a waste of police resources, or even morally dubious to report a crime which police are unable or choose not to investigate due to lack of evidence, resources or any other reason. Please either come out and allege that the entire complaint was a fabrication (better check with the libel lawyers first), or leave it.
@Rufus……yes but was there a crime? You seem to be making as many assumptions there, potentially just as dubious.
The point about the successive dramatic pronouncements made by Mr Joyce is that they have proven to be variously wrong, baseless or gone unfulfilled. Just like the payment of dividends to shareholders.
The most damning thing is that it is only necessary to archive and quote what this management says to make the points I have chosen to draw attention to. They have no-one to blame for this but themselves.
They have collectively and individually failed to perform. Now in the absence of a strong middle east carrier to come to their rescue, they want to curb the ability of a successful carrier in which a rival middle east carrier has equity to compete with them, as well as compromise the agreed coalition and minority government trade policies.
I’m asking for Qantas to be accountable for what it says, and to back what it says with results. Not spring a 90% underlying PBT tax result on the market 25 days before the end of the financial year, which in statutory terms, will mean almost certainly mean a full year loss. Increasingly so are other reporters.
It’s nice to see other readers challenge Ben’s musings. Rufus and Postman well done. Apart from death threats we also have the “disastrous” withdrawal of two frequencies to LHR that the “Olympics” surely would have saved plus of course the constant banging on about 767′s (Old), 777′s (Should have bought), 787′s (Don’t know where they are all going to go but probably to JQ because they are taking over QF) oh and 747′s (Can’t believe they are still in the fleet).
Qantas has real issues which management continue compound through poor strategy, execution, labour relations and indeed in this instance PR … I’ve never known an airline to talk itself down so much. Saying that though, the reporting of QF, its state of affairs etc. needs to be more detailed (It is a complex business), accurate and indeed less sensationalist … Enough of JQ taking over QF, death threats etc. etc.
It’s domestic arm is strong, so is JQ especially it expansion plans in Asia and then there is the loyalty program – One of the best in the region. Other parts of the business, including international, are not so healthy with indeed international being the hardest to recover. That said, get some perspective, I think you will find that Virgin results are not that stellar (Nor NZ’s for that matter but are you calling for the sacking of Rob) either when announced and you may want to ask how their flagship trans-con product is going. We keep on hearing 100% growth here and there in corporate account for example but a 100% increase from nothing is still nothing and QF is maintaining is strong corporate/government base for the time being.
As a shareholder and platinum flyer I’m constantly disappointed by Qantas and I wish Joyce and his team would go but that’s only going to happen with constructive, insightful debate the exposes the weakness in the team’s strategy, past performance record and poor delivery capability. Not conspiracy theories etc.
78Lately,
We seem to agree on a number of things but you’d rather I used gentler words.
I won’t. But I will quote back the guff that managements unloads on the general media, and ask whether any of it is delivered in the form of successful action.
Qantas isn’t helped by deferential reporting that overlooks the destruction of brand value, shareholder value, employee commitment or customer loyalty.
Running around Capital Hill trying to suppress a durable and growing domestic competitor, or reshape the the international environment to suit neglect and incompetent management is as mentioned earlier, more than a bit rich.
No sure Emirates is dead. The AFR today suggests it is allive but very complex in terms of doing a deal. Too much sharing and IAG and One World are very upset, but I am sure a deal is there that enables better access to continental Europe via Dubai and a QF flight going to Dubai.
Emirates is a possibility. Or a ‘conspiracy’ as some of those in this discussion claim, but I know that the possibilities are real, provided they are on EK’s terms.
This is why I drew attention in some radio spots yesterday to the hypocrisy about Qantas carrying on about Etihad, when Qantas is trying to do a deal with a UAE bigger sovereign owned carrier which is based at Dubai which is about as far from Abu Dhabi as the upper Blue Mountains are from Bondi.
We should keep in mind that there are investment entities in the UAE that are sovereign owned, but not airlines in their own right. Similar to Temasek Holdings in Singapore in that regard, and while this doesn’t move the foreign equity cap nor the possibility of FIRB disapproval, those entities may be a source of equity in many other things needing funding in this country, and that reality inevitably comes into frame when attempts are made to change the competitive landscape in aviation in a way that compromises policy commitments to freer trade.
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