The management blood bath at Qantas today could be a long overdue change to its corporate culture, or a big mistake.
Whichever it proves to be, it’s happening quickly under new CEO Alan Joyce.
The executive cadre that his predecessor Geoff Dixon set up is in tatters, what is left of it. Joyce is saying things no one expected to hear, about protecting full time non-management jobs while abolishing rather than purging whole tiers of executives.
He is bringing maintenance back to Australia as overseas contracts expire, to ‘conserve cash’.
And he is promising to keep cutting at capacity, front office functions and capital expenditure until equilibrium is reached between the demand and supply sides of Qantas and Jetstar services, and no doubt keep in touch with what financial analysts will tolerate in terms of capital expenditure and the avoidance of more equity placements.
This probably means more days like today, as Qantas succumbs to the same collapse in demand, especially for higher priced luxury international services, that is hitting those airlines everywhere that relied on these types of services for a large part of their revenue.
He made a few other comments today that suggest he is not going to totally exterminate the full service Qantas product and replace it with the Jetstar experiences, despite the self harm Qantas did to itself under Dixon in terms of dirty, unreliable and inadequately maintained aircraft.
Joyce said no more replacement of Qantas domestic services with Jetstar was contemplated. The growth that had been available to Jetstar domestically had been largely taken up, and its ambitions were now focused on New Zealand domestic services and international flights.
However he said London and Los Angeles were not cities where he saw a need for Jetstar. So there goes any notion of a Jetstar A380 with 800 ultra cheap seats, or even the tightly packed 787 Dreamliners that it was supposed to start getting in the second half of last year.
Just when, of even if, Jetstar gets any 787s and exactly what these wonder jets will do, is the subject of apparently tough negotiations going on with Boeing about the first 15 of an order to 65 of the plastic fantastic Dreamliners which were to have gone to Jetstar in the second half of last year.
(The Dreamliner hasn’t flown since being rolled out in July 2007. Boeing is still saying the first customer All Nippon will get 11 of them in three months starting February next year. This is not credible, but what is happening in the 787 program is part of a different and so far increasingly sad looking saga in Seattle.)
Qantas under Joyce and in a deep recession is going to solve the problem of replacing aged 747s and 767s the easiest possible way, and ‘fire’ them just like its excess managers.
There will be a steady trickle of new A380s, A330s and 738-800s, and the view in Qantas now seems to be one of waiting until demand returns to reassess other types of new jets from Airbus and Boeing when they are closer to being a reality.
From the sound of the depressed situation abroad, Qantas is not going to lose a place in the queues for new jets, because they will have become much shorter or vanished.