Video compilation added to end of post
This morning’s confirmation in The Australian of a plan by former Qantas CEO Geoff Dixon to buy a ‘strategic’ stake in the airline puts its current CEO Alan Joyce and chairman Leigh Clifford at risk.
That risk arises from their claims to have no knowledge of any move on Qantas by interested parties, claims made in various interviews and at the Qantas AGM of 28 October, the day before Alan Joyce insists that he woke up and said to himself it was time to ground the airline without warning to all those customers it kept selling fares to for flights that wouldn’t operate.
Joyce and Clifford are potentially compromised by the revelations because while they are required to maximise returns to Qantas shareholders, Joyce had been meeting with Dixon as far back as May with his predecessor who was involved in a plan to take advantage of the low share price to buy a strategic stake.
If we assume that Joyce learned of this plan and informed his chairman Clifford of this materially significant intelligence then Clifford is going to come under intense scrutiny for the way he chose to handle that information. If Clifford didn’t know anything about, he is at risk for failing to exercise diligent oversight of the performance of his CEO, not to mention failing to investigate persistent media reporting of market talk of an impending play on an undervalued Qantas.
There is an obvious tension between Joyce meeting with a person involved in a potential play based on a declining share price, and his role as CEO to maximise the company’s value.
The only defence Joyce would have is that of being taken for a fool by Dixon and kept completely in the dark. In a second article in The Australian Dixon makes the following observations which go to the very nature of regular contacts between himself and Joyce.
While speculation of the play is said to have angered Alan Joyce at the time, Dixon says they remain “quite close”.
“We would have a drink every couple of weeks,” he says.
“We get on very well. We are, as he said the other day, very left of centre in our politics. Do I give him some advice? Very rarely. If he asks my opinion, I give it. When we get together we talk principally about airlines.”
There is an enormous body of video audio records of Joyce and Clifford batting away speculation about a bid between May and end of October. Dixon would have known this when he chose to disclose the true state of affairs to The Australian’s business affairs journalist Damon Kitney, and this means investors and employees need to know what will be the consequences, intended or otherwise, from this story being lobbed at this moment.
It is implausible that Dixon had a Joyce moment, woke up and thought it was time to suddenly tell all, as distinct from spontaneously grounding the entire airline.
One thing is clear. Qantas stock has been traded for months without all investors being in possession of all of the information known to Joyce. On what basis did Joyce choose not to share his information about the matters raised by Dixon? And who else knew?
This management has some credibility and transparency issues. Joyce broke all the normal protocols in going public over ‘death threats’ that a subsequent police task force investigated without result for weeks and at considerable public expense, and according to some reports, achieving no result because of the later intervention of Qantas.
He has been materially contradicted over the spontaneity of his decision to ground the airline, and break Australian consumer law, on 29 October, by evidence concerning hotel bookings, and the courier arrangements made well in advance for the individual delivery of lock out notices to some 30,000 Qantas employees, and he has given inconsistent guidance about plans for a premium narrow body Asia based carrier that will variously cost 1000 jobs, no jobs, be based in Singapore or Malaysia, and while only minority owned, will save the fortunes of Qantas international, which in the meantime is being reduced in size.
This is an enterprise in which the unions, the focus of management finger pointing, could disappear tomorrow and it would remain in severe decline because of its failures in managing its brand, its product, its fleet and its network.
Like the police death threats fiasco, the Dixon disclosures leave a very bad smell hanging over this management.
UPDATED: The video compilation below is circulating on the public domain, and could be seen as supporting some of the most troubling suggestions that the management and board is conflicted by these disclosures.
It starts with Linda White, the assistant secretary of the Australian Services Union questioning Leigh Clifford on rumors of a private equity bid, moves on to categorical denials from Alan Joyce to a Senate committee that he had talked to anyone about any external interest in the carrier, and ends with a lengthy extract from an interview between Ticky Fullerton and Geoff Dixon on ABC TV’s Lateline Business program on 7 September which can be viewed in full or read as a transcript here.