If as Senator Nick Xenophon reminded us in this Fairfax opinion piece, Qantas had successfully extracted a $3 billion unsecured loan from the Abbott Government early in 2014, there would have been some dramatic consequences.
Virgin Australia would have been smashed. Monopoly pricing would have return to domestic flight, and those Qantas shareholders flying to Perth for this afternoon’s AGM would have paid a great deal more than they did.
But Qantas didn’t get the $3 billion (as outlined by PM Abbott and Treasurer Hockey) and the problems that were behind the request by its group CEO Alan Joyce, evaporated because of a successful restructuring of the airline and a collapse in the fuel price (notwithstanding a lag related to fuel hedging contracts) and a truce with Virgin Australia over excess capacity in the skies.
In the period between then and now fares have indeed risen, but competition remains very alive, and Australia has two mainline carriers offering outstanding service compared to any other continent wide domestic market on earth.
This afternoon’s AGM has been curtain raised in a manner of speaking by a media conference by Senator Xenophon and the TWU.
Among the many points raised by the good Senator are the ongoing issues as to what has been really going on in the Jetstar franchise, and what he terms “little more than dumb luck and an accounting exercise.”
That’s perhaps a bit unkind. There is no doubt that under Mr Joyce as Group CEO since late 2008 a great deal seemed to go wrong , including things Jetstar abroad, but investors now have a very profitable set of Qantas brands, supported by or supporting in some way, the Jetstar journey, which may or may not be another matter.
As Senator Xenophon notes, no one outside core management knows, since there is no transparency as yet about Jetstar’s numbers. On the other hand the numbers that now count are those that have seen the Qantas share price quadruple in recent times from lows of just under $1.
Qantas employees have been granted a generous if one off bonus of five percent of base salary, those shareholders not faint of heart are looking at a huge paper profit, and are going to get a dividend which isn’t a dividend and very tax effective, and the pilots have been mollified by the promised conversion of eight options for Boeing 787-9 into orders from late 2017, about three years after just about everyone with Dreamliners started flying them to Australia, including Jetstar international.
Thus looking at Qantas in the rear vision mirror of history might not work all that well today. A fierce focus on what it does in the future might be far more appropriate.
The TWU makes a troubling case in today’s pre AGM razzle dazzle that not everyone who makes Qantas what it is has been able to participate in its recovery.
It has a survey that found many of those who are in part time or contractor relationships with Qantas are struggling financially.
The union said “ two out of five aviation employees surveyed are working part time on wages which puts many of them earning below the poverty line. Almost 70% of employees say their pay does not allow them to meet their costs while over three-quarters say they cannot afford to retire at 65, according to the report The Qantas effect: the changing nature of aviation employment.
“Qantas as the market leader is driving a race-to-the-bottom when it comes to aviation jobs. They no longer employ people full-time and use labour hire firms on low cost contracts to carry out their work,” said TWU National Secretary Tony Sheldon.
It’s a message that will struggle to cut through when employees and shareholders can see nothing but clear blue skies ahead, and have windfall dollars in their pockets.