It would be fair to say, whether one admires or detests Qantas under Joyce, that it needs some very good media as soon as possible.
Just read today’s AFR, starting with this story, to see why. The content, which talks about small non-ASX-reportable stakes in the airline by disaffected shareholders Geoff Dixon, Peter Gregg, Mark Carnegie and John Singleton, is not of itself going to surprise anyone following Qantas. Who would have thought they might have some shares?
But it signals trouble soon for the struggling Joyce administration, under chairman Leigh Clifford, because the theme that keeps recurring in the stories about the contras is a ‘change in strategy’. Joyce and Clifford have been strategic calamities for the airline if measured by stock price (stuffed), dividends (none) and successful strategic declarations to date (none).
It is a woeful mess. Although some readers, bless their contented stomp-on-me-harder souls, seem to enjoy what has so far been wrought.
The usual way Joyce has sought respite from failure has been to bring out the big guns in terms of media. Minority owned non Qantas airlines to cross subsidize long haul Qantas to be based in Malaysia, Singapore, Mongolia or Micronesia or anywhere. Or union death threats that didn’t go anywhere chargeable. Or the ultimate Pyongyang style media event, with a declaration of war against recalcitrant workers, which involved shelling the customers, which was a huge success, costing $194 million in the 2012 financial accounts.
All while the market share was pillaged at home and abroad by smarter, even not so smarter carriers, who stuck to the incredibly passé formula of flying where there was demand in well equipped modern jets that were cheaper to run, despite the advantages Qantas should have enjoyed from the fuel purchasing and capital funding benefits of a strong Australian dollar.
But hold on. What do the contras want, and how exactly would they benefit Qantas customers and shareholders?
What they want, in their own words so far, is the under valued assets held by Qantas, such as $3 billion in cash, and the liquidated value of Jetstar’s Asian franchises and the Qantas loyalty frequent flyer grocery and petrol buyer scheme.
It is not about making Qantas play catch up with the Virgins, who have been stealing the lollies from the pantry for some time, but about looting it. It can be argued that is also what the current management has been about too, except that it couldn’t even organise an inside job. But that might be too cynical.
The point is, neither the current management and board nor the contras have articulated a vision that will make Qantas better. The former have a proposal that will make Emirates better, and the latter want to get their hands on what would be fairly priced at around $2.50 a share rather than $1.275 on Friday’s market close.
Dixon et al are correct about the value of the Qantas frequent flyer scheme, but its sale would, duh, mean that it was no longer of continuing benefit to post-pillaging shareholders, and no one in their right mind could imagine for a second that any new owners of the FFP wouldn’t immediately set out to squeeze every last drop of loyal blood out of its members and those enterprises which buy points for halo marketing purposes.
There are I think, a few tragics out there would think the loyalty program is about rewarding them for choosing Qantas. It isn’t. It is about turning the data base into a selling opportunity. This is true of all such programs. The current Qantas program is the best and most generous in the world. It won’t stay that way if Qantas sells it. And most likely, not stay that way if it keeps it, although the process might take more time.
The contras are not there to improve Qantas for you, or me. They are there to make money, as fast as possible. That is, do what Qantas under Joyce and Clifford has failed to do.
What headlines might the immediate future offer for Qantas? Well, new jets for Qantaslink, and a further extinguishment of the extravagent legacy terms and condition for Qantas pilots, engineers, cabin attendants, support staff and anyone who dares to draw a salary would be a start.
And the Hong Kong authorities approving the Jetstar Hong Kong venture could be compared to a 21st century Australian gold rush in China, sort of like a reverse of the history of the Australian gold rushes of the 19th century if the publicists go totally over the top, but then again, both the decision, and the ultimate consequences of whatever decision is made, are beyond the control of Qantas, and might never repay such enthusiasm.
Joyce and Clifford need good headlines, and they need them now.