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Joyce announces Tourism Australia ‘grounding’ over Dixon

The Pyongyang charm school is back in action at Qantas, which has grounded support for Tourism Australia because its chair is saying naughty things about it

In a move that is tactically similar to grounding Qantas passengers in order to get the unions, its CEO Alan Joyce has suspended its support for Tourism Australia because its chair, former Qantas CEO Geoff Dixon, is being beastly to it.

The object this time is to force Dixon, who is involved in a private equity plan to bring ‘strategic change’ to Qantas, out of this position, rather than stop long haul pilots wearing red ties and making in flight announcements, and force an end to a lawful union campaign against the airline by ground staff and engineers, at the height of the 2011 dispute over delayed enterprise bargain renegotiations.

Joyce says Dixon’s attacks on his management of the airline places him in an ‘untenable’ conflict of interest at the top of the national tourism promotion body.

However the report makes it clear the $44 million worth of support Qantas was giving Tourism Australia is now going to the various state tourism authorities that unite under the national organisation as well as encourage domestic visitations, and if the tactic succeeds, Dixon will be able to devote himself full time to correcting what he, and others, see as disastrously bad management by Joyce, on whose watch the airline’s fortunes have plummeted to new lows.

Joyce is the luncheon speaker at the National Aviation Press Club in Sydney today.

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  • 1
    patrick kilby
    Posted November 28, 2012 at 6:04 am | Permalink

    Ben it is not unusual for clients of companies (advertisers etc) to have gag agreements to stop them slagging off at the hand that feeds or the hand they are feeding. The ED of tourism Austrlai should have brought Dixon into line. And for Dixon the suggest things were better run in his day is a bit of pot calling the kettle black. Most of Ben’s complaints have their origin in the Dixon policy of building a house of cards then assett stripping it.

  • 2
    Ben Sandilands
    Posted November 28, 2012 at 6:19 am | Permalink

    Let me list just a few of the issues I have with the Joyce management since it began almost four years ago.

    1. Announcing an unworkable Asia strategy in the Australian media without telling the countries concerned in advance, creating trade relations friction

    2. Announcing death threats and tying up police resources for information that resulted in a discontinuation of the investigation

    3. Grounding the airline without warning to 70,000 passengers then compensating those who weren’t even booked at the time and claiming it was all spontaneous.

    4. It was also costly, $194 million costly, and the same objective would have been achieved by giving due notice to Fair Work Australia.

    5.Ruining the domestic business class product with the plastic lid A330 ‘enhancement’, and replacing two class 737s with single class Q400s with no seat recline on flights taking more than two hours.

    6.Proposing to deploy brand new jets, 787-8s, on Jetstar routes where the capacity is already being cut back because they have not attracted the patronage expected. (Which with a 16 hour flight from Melbourne to Beijing is not really a surprise.)

    And so forth. These are exceedingly costly management errors, and very damaging to the company. They have nothing to do with the Dixon period, and are all AJ’s work.

    Dixon’s period has been critiqued at length here and in the business media, and without rehashing it, in general there was very close agreement between most of that media and myself and those I speak to as to the things that went wrong, nearly went wrong, or should have gone better during the Dixon period.

    Until this morning there has not been the same degree of agreement on Joyce. That appears to be changing, although I don’t think it should be a concern for any of us that we may disagree on these matters, since discussion free of spin management is the critical requirement for an informed market.

  • 3
    John Thomas
    Posted November 28, 2012 at 7:47 am | Permalink

    The question remains though as to Dixon and his cronies true motivation. Is it because they think Qantas could be run better, or are they just after the pot of gold they missed out on in 2007? Looking at who’s involved I think the latter is more likely.
    Is this all part of a much bigger plan that’s running off the rails now that EK’s involved?

    So my paranoid gene is twitching.

    Dixon anoints Joyce as CEO. Bit of a twit…good. Share price looses 80% of its value…good. Borghetti, who should be CEO leaves, becomes CEO of main opposition, turns the business around…good. Dixon rounds up some blokes, some who were involved involved in the last attempted scam and buys up a stake. Starts touting his wares to the major share holders, remember there are only four of them, the public, the government, and anyone who’ll listen. Makes it sound like what he wants to do is for the benefit of the shareholders, the staff, the country, whoever. Wrests control, and gets the climax he missed out on in 2007. He’s in a hurry now because getting into bed with Emirates wasn’t part of the plan. I wonder if Joyce and Dixion are still catching up for that coffee each week.

    What’s better, the devil you know or the devil you used to know?

  • 4
    ltfisher
    Posted November 28, 2012 at 8:26 am | Permalink

    It is correct isn’t it that Dixon was instrumental in having Joyce made CEO? So perhaps all we have here is something along the lines of ‘what I made I can break’? The nagging thought however is that Dixon was party to the previous private equity sell out proposal and that wasn’t entirely in the interests of Qantas staff or customers and so now really is, as John Thomas says, “just after the pot of gold they missed out on in 2007″. Reminds me of that saying about always backing self interest.

  • 5
    wordfactory
    Posted November 28, 2012 at 9:18 am | Permalink

    It was the height of arrogance (of which he was always the master) for Dixon to imagine that Tourism Australia would support his side of a power play at his former employer, which happens to be the Australian national carrier. But he was right because the politicians ultimately responsible for TA are too busy fighting among themselves to discipline him. The Minister for Airport Noise Anthony Albanese also has his hands full campaigning to move the TA head office to Mittagong to be nearer to Wilton.

  • 6
    Nick Brodie
    Posted November 28, 2012 at 9:25 am | Permalink

    Dixon’s position is untenable – he is in direct conflict in his role in a government-owned business enterprise.
    Remember, if Dicko et al had their way last time they had a tilt at Qantas, well, there’d be no Qantas today – it would’ve been swallowed up, broken apart and either sold off or liquidated as part of the GFC – so be very careful what you wish for…..
    As for the endless cheap-shots and ‘Virgin is so much better’ comments – look at this: Virgin + Etihad + whoever else you want to plug in, umm hello isn’t this the same as Qantas + Emirates? Virgin + Skywest, um hello Qantas + Qantaslink. Virgin + Tiger, ooh, again, Qantas + Jetstar. (BTW Virgin is over 66% foreign owned). Seems like the Qantas business model works after-all – 2-brand strategy, international capital-lite virtual networks.. all seems awfully familiar… except when V33 (for the 33% that isn’t foreign owned) does it, it’s o.k… actually, I should call it V33/80 for 33% Australian-owned paying 80% of what Qantas pay…..
    As for endless criticism of Q400 (not my favourite either) why don’t you try the Skywest ATR service between Canberra and Sydney then come back to me….
    Joyce may be a lot of things and he may not be likeable but Qantas has never been bankrupted, it makes money, has no Government support and it’s still Australian owned.
    Why is everyone so quick to stick the boot in?

  • 7
    Ben Sandilands
    Posted November 28, 2012 at 10:16 am | Permalink

    Nick,

    Qantas lost $244 million in FY 12, and its share price is still around half book value. It’s fuel hedging with a strong AUD was very poor compared to SQ with a weaker SGD.

    It’s staff are disengaged. The Emirates deal will if approved not give it any more customers, and disenfranchise those who support the brand long haul to Europe from everywhere except Sydney and Melbourne.

    Joyce’s problem is his performance and comparison with peers.

    If the spin isn’t questioned the shock and depth of failure will be all the more painful.

    And $194 million for a strategically poor way of handling the industrial situation is a very bad outcome.

  • 8
    discus
    Posted November 28, 2012 at 10:36 am | Permalink

    John Singleton was quite clear on saying why they wanted this. It is about the 3 billion in cash and what they can flog off. Their is an enormous amount of unrealised value in Qantas. These guys are not the cavalry charging over the hill. On the other hand the incumbent has proven disastrous.
    So is my enemy’s enemy my friend (for now)?

  • 9
    ltfisher
    Posted November 28, 2012 at 12:15 pm | Permalink

    If there is all this capital lying about in Qantas why doesn’t the present management make better use of it for the benefit of customers, and perhaps shareholders?

  • 10
    Frank Smith
    Posted November 28, 2012 at 12:29 pm | Permalink

    How times change…. Old mates turning on each other.

    Everyone can understand Dixon’s antics or motives by now. He and his mates have too much money tied up in QF and have seen their value deteriorate with no dividends, so they would be really p*ssed right now. This is basically about extracting some value out of their QF investment over the past few years. It’s just that they seem to be turning on their old mate!!

    It’s been reported that there is $3bn in cash in the Qantas bank account, and that they may be chasing some of that. It hasn’t been reported how much of that is actually owed to clients who have pre-purchased airline tickets… That money really should be sitting in a Trust/Client account. Yet it’s actually used for Qantas working capital. I personally think that if they separated the funds for future tickets then they would not have access to 90% of that $3bn money. Airlines depend on fwd sales to run the airline…

  • 11
    timjack Elton
    Posted November 28, 2012 at 12:42 pm | Permalink

    “These guys are not the cavalry charging over the hill. On the other hand the incumbent has proven disastrous.
    So is my enemy’s enemy my friend (for now)?”

    Discus, well said, as weird as it all sounds, may be, just may be, Joyce has woken up this morning and realised the value of what his staff have been trying to tell him for the past three years or more.

    Remove the focus on the Jetstar expansion, redirect the 787s to the Qantas fleet would go along way in restoring confidence with the disgruntled staff. Well it would be a positive start, Joyce and Clifford are running out of time, it appears the whole world is turning against them and the current board, which some see as the ugly ducklings of the Australian business elite… featherless..

  • 12
    TT
    Posted November 28, 2012 at 2:54 pm | Permalink

    Alan Joyce is on a double-edge sword: while he can (rightly or wrongly) suspend funding to Tourism Australia, his action could be a recipe for TA to look for alternative partners (i.e. Virgin Australia). Imagine future TA campaigns overseas featuring Virgin brands and their partner airlines instead…

  • 13
    moa999
    Posted November 28, 2012 at 3:08 pm | Permalink

    Frank Smith,

    As well as the forward ticket sales (a liability), there is a similar liability on FF flier miles.

    Somewhere within the FF entity I suspect QF has a bunch of cash (which forms part of the consolidated $3bn), but also a big liability…

    Be interesting to know the cash outflow if every QF FF member decided to cash in their points for gift vouchers at DJs or Woolies.

    Either way the reality is it is not real cash in the normal sense.

  • 14
    nightflyer
    Posted November 28, 2012 at 3:20 pm | Permalink

    If the upper echelon of Qantas management had its eye fully on the main game, which is to actually run an airline operation for the mutual benefit of customers and shareholders, then they would take some of this purported 3 billion, buy half a dozen triple 7′s, go non stop Sydney Dallas twice a day and very possibly make money

  • 15
    Geoff
    Posted November 28, 2012 at 9:23 pm | Permalink

    Wouldn’t it make more sense to speculate that Mr Dixon put Mr Joyce in to carry on the grand plan to carve up QF and sell it off. This manufactured stoush between the two is another ruse to sow chaos and undermine the value of QF which had recently being going up. Today the share price went down 2% exactly what the plot requires!

    Sorry I’m getting carried away. Obviously I’ve been watching too many greed is good movies and CVs of Mitt Romney!

  • 16
    nightflyer
    Posted November 28, 2012 at 10:28 pm | Permalink

    Geoff – That Grand Plan has always been my theory too, but the Emirates link up seems to fly in the face of such a cozy arrangement (unless that’s another construct)and Qantas has also been spending serious money lately upgrading its Business Class product so why bother with that if the whole object is to sell. There is also a rumour about on the street that Mr Clifford won’t have a bar of Mr Dixon at any price and the CEO is just caught up in the middle. I’m mystified, but I don’t think I’m Robinson Crusoe there.

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