Alan Joyce’s fan fiction fantasy

Joe AstonColumnistOct 3, 2023 – 7.30pm
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Alan Joyce’s biographer Peter Harbison has launched himself into the simmering Qantas furore to defend his man – and sell a few books.
Originally slated for Christmas release, Penguin Random House has brought forward the publication of Harbison’s tome, Alan Joyce and Qantas: the Transformation of an Australian Icon, to capitalise on the present public fixation with its subject.

Former Qantas chief executive Alan Joyce has left his successor with a difficult path to navigate. Eamon Gallagher There are hordes of dudded Qantas customers in Australia today with fresh and livid travel scars. To go with their PTSD, they’re sitting on multimillion Frequent Flyer point balances and/or irredeemable flight credits – both about as useful as Venezuelan bolívar. They would be hankering for the tell-all account, a therapeutic evisceration of the lying kangaroo. Sadly, this will not be the book for them.
In an extract published in The Weekend Australian on Saturday, Harbison argued that Joyce “transformed Qantas into one of the most successful airline groups in the world”. He added that Joyce was “fairly paid and performed well” and that “in seeking to make the airline bulletproof, Joyce surely couldn’t have done much better”.
This is the salad of myths that Joyce and his Qantas PR machine have quite beautifully perpetuated. Most of them have been swallowed whole by the Australian media, but particularly the fairy story that Qantas under Joyce was extraordinarily financially prosperous. One recent newspaper column even described Joyce as “one of the all-time money-generating machines of the aviation industry”. That really is looking at the world through Alan’s enchanted spectacles.
From the financial years 2009 to 2023 inclusive, which were the 15 full years Joyce ran Qantas, the company generated $9.2 billion of (pre-tax) statutory profits in the good years, but $10.6 billion of statutory losses in the bad years. That’s a total outcome over 15 years of negative $1.4 billion, or an average annual loss of $90 million.
Many would say – and I would agree – that you can’t blame Joyce for the $6.3 billion of statutory COVID losses he presided over. For the consistency of this exercise, then, you also can’t credit him for the record 2023 profit which, by Joyce’s own admission, was achieved by swingeing cost-outs that only COVID allowed him to make.

Stark difference

So let’s take the 11 financial years from 2009 to 2019 inclusive, where Qantas made $6.7 billion of profits but $4.3 billion of losses. That’s a total outcome of $2.4 billion, or $220 million of average annual pre-tax profit.
$220 million a year is so far from making Joyce the Profit Terminator that it isn’t funny. Qantas was a public company for 14 years before Joyce became CEO. Its average annual pre-tax profit over that time – between 1995 and 2008 – was $690 million. The difference is stark, even before you adjust the real value of those profits for inflation.
In those earlier years, of course, Qantas faced far less competition from foreign airlines on international routes. That much is certainly true. Yet, it doesn’t change the fact that Alan Joyce was never a money-generating machine.
The only way Joyce looks good is if you measure him by underlyingprofit, which is his preferred earnings metric. Of course it is! These are earnings where he has deleted the bad bits – minus the write-downs, excluding the fleet groundings, nothing inconvenient, basically. It would be terrific if shareholders could pay their mortgages with underlying earnings, but alas that is not a supernatural privilege extended to them.
Even including the COVID years, Joyce posted $6.2 billion of underlyingprofits in 15 years, or $413 million per year. They’re what Harbison’s seeing as he passes around Alan’s dutchie, his head spinning at the overwhelming magnificence of Alan’s magical world.
Harbison says Joyce was paid fairly, but when you take the financial performance of the company into account, $125 million was a helluva lot. That’s $8.3 million per year, on average, significantly more than the big four bank CEOs (notwithstanding Matt Comyn’s outlying $10.4 million remuneration in 2023). The smallest of the big four, ANZ, is still more than eight times bigger than Qantas by market capitalisation.

Challenging period

The new book seeks to perpetuate another myth, one that has already been discredited. Harbison reckons “it should be remembered that [Joyce] was preparing to leave [Qantas] when COVID struck in all its fury, and the board specifically requested he remain for a further three years to see the airline through this uniquely challenging period”.
It is a matter of public record that nine months before COVID struck, in May 2019, the Qantas board extended Joyce’s tenure by “at least” three years. Sticking around made him a further $30 million.
The book extract, at least, was not wholly fan fiction. To give Harbison his due, he conceded that Joyce has a tin ear; that the Chairman’s Lounge “has no place in a fair, competitive marketplace”; that the current airport slot system is being abused; that “reform is needed to provide better consumer protections … for flight delays and cancellations”; that the Albanese government is engaged in protectionism; and that Qantas’ COVID response was, “by any standard … sadly lacking” and suffered “a disproportionate focus on rebuilding financial stability”.
But in lauding Joyce for leaving Qantas in a position of financial strength, Harbison completely ignores the fact that Joyce shamelessly stole from future profits to pad his own. Joyce did this by starving the airline of capital expenditure on new aircraft, the burden of which will now be unduly borne by his successor Vanessa Hudson, on whose desk now sits the world’s largest, overflowing sick bag.
What’s more, Joyce claimed to have achieved “structural changes in earnings” by taking $1 billion of annual costs out of the business. Hilariously, Hudson was CEO for three entire weeks when she announced that $230 million was being reinvested in customer improvements. How are the changes structural, when a quarter of them already need to be reinstated just three months into financial 2024? And that’s just so far!
Pass me Alan’s dutchie, Peter. Please, give me a toke. Ah, yes, I see! They’re underlying structural changes. You just have to squint at them a certain way.
If only the Qantas board had determined to pay Alan Joyce his remuneration on an underlying basis. Wouldn’t that be nice? They could’ve paid him three-fifths of stuff all and, as a long-term bonus, a kick up the arse for leaving the company in this mess. Shareholders would’ve voted for that.