This nails it and he carries weight IMO
Qantas facing ‘extraordinary decline’ in trust and reputation[img]data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7[/img]
Qantas is the worst failure of board governance since the AMP.
And, just as happened at AMP, the first step in repairing the catastrophic damage to the value of the Qantas brand is that the chairman must stand down as soon as possible. And the same applies to the chief executive.
In the case of the Qantas chairman, Richard Goyder has a wonderful record of past achievement, but he took on two of the toughest chairmanships in the land, Qantas and Woodside. And then he added a task many times more difficult than either of those two chairmanship: the chairman of the AFL Commission. It was too much.
Chief executive Alan Joyce has done many wonderful things at Qantas but CEOs who stay on longer than 10 years become much riskier for the chairman and the board, because they often become too dominant.
What makes the governance breakdown of Qantas so much more serious is that it was not caused by a sudden event like the ACCC charges against the company for selling airline tickets for cancelled flights. Over two or three years Qantas suffered an unprecedented destruction of the value of its main asset, and the issues causing the catastrophic decline were not tackled by the board – either because of ignorance or a failure to do their job.
Roy Morgan Research actually documented how Qantas plummeted from being one of the country’s most trusted brands to one of its most distrusted, and that in 2022-23 the decline was gathering pace. The Qantas brand ranking fell an unprecedented 181 places in the nine months to June 30.
In the same period Australia’s most distrusted brand, Optus, fell only 18 places, or 10 per cent of the Qantas fall.
Every board alarm bell should have rung, particularly as Morgan chillingly isolated what was outraging Qantas’s actual and potential customers: “There was moral blindness everywhere, from appalling call centre delays, cancelled flights and snail’s-pace fare refunds to a leader turning a blind eye to the anguish of tens of thousands of once-trusting customers.
“But the biggest example of Qantas’s moral blindness was Alan Joyce refusing to pay back any of the $2bn in corporate welfare, including JobKeeper,” Morgan said.
A proper board investigation into the Morgan findings would have revealed the complaints that arose from the sale of cancelled tickets, now the subject of an ACCC charge.
Unless Qantas plans to challenge the ACCC charges, the company faces more blows.
First, if the ACCC case goes to court, I would be stunned if the fine isn’t much greater than what the ACCC is seeking. Second, all the cancellations and fraudulent ticket sales have to be reversed, and there may be additional damages. Then comes the enormous task of starting to repair the damage that has been done. That task is urgent and cannot start while the current chairman and CEO are in office.
Whenever a situation like this arises, usually more disastrous events emerge. I have no evidence to suggest there is a link between the unprecedented Qantas backing of the divisive Yes campaign and the government’s decision to block extra flights by Qatar airlines in the Middle East.
But almost certainly parliament is going to demand that this be investigated, which means that more damage for the brand.
In addition, like all other large companies, Qantas will be aware from its legal advice that the public debate about the voice to parliament is not the main game.
The Uluru agenda of self-*determination, a separate system of law and international relations, plus heavy reparations will not be achieved by the voice to parliament. Rather it is the voice to the public service where the voice body will have the power to completely clog up the running of government to achieve the Uluru agenda.
Maybe the Qantas board needed to look more closely at such an alignment of the company’s main asset, the Qantas brand, with such a divisive issue among its *customers.
When company boards have a strong chief executive, it is very tempting to just leave matters to the chief executive and top *management.
And in the case of Qantas it worked for a long time. But not in recent times.
To be fair to Alan Joyce, along with the board he had reduced the capacity of the airline in line with the sharp reduction in passenger numbers, and when the numbers exploded unexpectedly the airline was not prepared to handle it. That sort of mistake is understandable and not a governance breakdown. But then came all the rest.
The new CEO of Qantas, Vanessa Hudson, will need to distance herself from her predecessor and cut a very different path as she tries to restore value in the brand. It is usually best for an outsider to take on this task, but there are precedents where long-term executives have been able to turn the company’s brand value around (CBA is a good example).
Qantas shareholders will have to hope that this is one of those occasions. But she has no hope of doing that unless the board recognises what has happened and undertakes the required surgery that is essential in any rescue.
Another issue which will come to the fore is Alan Joyce’s retirement package. Only the board and top management know how Joyce’s agreement was structured. But there are precedents for amounts of money to be held back assuming the agreement allows it. In 2016, one of the great executives of Rio Tinto, Sam Walsh, found himself accused of bad practices and the board held back part of his retirement package until the matter was sorted out. Sam (not surprisingly in my view) was cleared and he received his full retirement package.