Financial Review - 23/03/2020
Qantas chief executive Alan Joyce has never been one to waste a crisis. And since the novel coronavirus completely shuttered the travel industry, you’d expect an airline boss to feel a little jumpy.
Nevertheless, Joyce’s performance on Friday morning television – in which he warned the Morrison government against bailing out “the badly managed companies which have been badly managed for 10 years”, i.e. Virgin Australia – was exceptionally inelegant.
He was overreacting to a comment piece in that day’s The Australian which imagined that “some companies may end up having to be nationalised, if even only temporarily” and that “Virgin could be one example” because “there is no way [the government] will allow Australia to return to a virtual single-carrier environment in a post-virus world”.
Joyce’s initial comments on Sky – that Canberra “can’t pick winners and losers; whatever aid is given to one particular company … has to be given to everybody in that sector” – would’ve sufficed perfectly. But Joyce’s shortcoming has always been in craving a needless fight.
Short memory
By Joyce’s seventh year, he’d delivered $2.6 billion of accumulated losses and was begging Tony Abbott to pick winners and losers by extending him a $3 billion loan guarantee. And after 11 years, Joyce has accumulated net profits of only $1.75 billion – a factoid easy to forget when you see his remuneration ($92 million and counting), but crucial to remember when he critiques other companies “which have been badly managed for 10 years”.
Six years since he asked the federal government to save him, Joyce now reckons that “when good companies have managed their position very well, the government should let them manage their way through this”.
His sudden aversion to any Commonwealth assistance is astonishing but welcome. Qantas could scarcely accept public cash only five months since his chairman Richard Goyder boasted that “at the end of this latest buyback, we’ll have bought back almost one-third of our shares since 2015 – the most of any company in the ASX All Ordinaries”.
Yep, that’s $3.2 billion of excess cash (on top of dividends) it returned to shareholders, or almost how much passenger revenue Qantas will suddenly forgo this March, April and May. Handing it over (while reducing its own share count) massively juiced the airline’s share price and total shareholder returns, upon which Joyce’s bonuses are explicitly calculated. Thus management is incentivised not to save cash for a rainy day – nor, indeed, to reinvest profits productively, as Treasurer Josh Frydenberg pleaded in August.
Some quotes above from the Financial Review columnist Joe Aston in a scathing assessment of
Alan Joyce portraying him as avaricious, rapacious and possessing selective memory.