Archive for February, 2014
QANTAS is cutting 5,000 jobs from its 33,000 or so workforce and everyone is once again aghast. Our national carrier, the flying kangaroo! Oh dear, how can this happen? Well, part of the problem is the Irish Git, Alan Joyce. The $5 million plus a year hatchet man playing CEO. He was brought to Australia some years ago when that other airline, ANSETT, ended its days. He then took his golden parachute and baled out over Ireland, or wherever he went once the dirty work was done.
Then he is brought back to oversee the ripping apart of QANTAS. You see, he isn’t an Australian and while I am certain we could have found someone with sufficient talent and expertise to manage the company from our own ranks, he, or she, would then become something of a pariah in their own country. Far better to use a foreign mercenary, something the French have been doing since the 1860′s with the Legion Estrange. The airline has lost $252 million in the first half of the current financial year. So how are they still in business?
First of all it depends on how you do the accounting. Secondly, QANTAS is a very cash rich company as everybody pays in advance for their flights, while the company pays on 30 days or more. Well then it must be the competition? Virgin Australia are allowed lots of foreign ownership and so can tap them for cash whereas the QANTAS Sale Act means QANTAS must maintain a local majority shareholding and thus can’t attract the foreign investment. They have asked the federal government to either guarantee their debts (in other words the tax payer gives welfare to a huge corporation) or they change the Act and allow more foreign ownership.But to hold on to the landing rights in foreign countries at ‘national carrier’ rates, QANTAS must maintain majority Australian ownership, so how will they compete?
Like Virgin, they can form a domestic airline and an international one. Two separate companies, both using the same livery. Virgin Australia and Virgin Pacific did this. They could stop competing with themselves via their other company, JetStar but they have just sunk money into JetStar Asia and their grab for some of the lucrative business flying out of Singapore.
They are selling their lease of Brisbane airport and then renting back the facilities they need. This brings in cash and the rental is a huge 100% tax deduction. They might sell their frequent Flyer loyalty progam and make more than the company is valued at! This is only the second first half loss in the last 20 years, so they have plenty of money in the bank. Like I said, don’t cry for QANTAS. So what do they do? They slash jobs, 5,000 of them. It begs the question how will they operate? If they can operate with that many less staff, then surely they have been overloaded and have a lot of redundant roles. When Ansett went there was much gnashing of teeth and tears but all of those people found new jobs. The same will happen with QANTAS as will no doubt the assembly line workers at Ford, Holden and Toyota when they stop manufacturing here after the last few million of tax payer funded bailout money is paid to their executives and shareholders.
Don’t cry for QANTAS, they are a corporation. The employees have for decades enjoyed well above award wages thanks to their very powerful unions and of course, they have had the cheap flights perk they are always very quick to brag about when you meet one at a social function. The air traffic through our airports won;t decline, it is growing all the time. So the ground staff will still be needed, just wearing a different uniform. They will be taken up by contractors who will be paid in dollars QANTAS can write off as a legitimate cost of business, much cheaper than paying wages and superannuation and all the other benefits they currently cover.
If the airline can’t compete then it needs to shut down like any other insolvent business. There will be others to fill the vacancy, have no fear and no doubt they will scoop up the staff. As for Joyce, he will get his bonuses and his stock options and his golden parachute and move on to the next corporation someone wants to strip and sell off. Do I care? I haven’t flown with that airline for years and never will unless it is a code share and even then I doubt it.