Behind the gloss of PR at QF
* Elizabeth Knight SMH
* August 20, 2008
SINCE Leigh Clifford was appointed chairman of Qantas at the end of last year, full-scale change was an inevitability. A few weeks ago the chief executive, Geoff Dixon, announced his retirement, well before the June 2009 date at which he had insisted he was due to go.
Yesterday there was another bombshell when the airline announced that its finance director, Peter Gregg, would also be leaving. Gregg's retirement is believed to have been forced.
The only man left standing among what has for years been the troika of senior men running Qantas is the head of Qantas mainline, John Borghetti.
There is talk - although unsubstantiated - that Borghetti was summoned to Dixon's office a few weeks back to be told the news that Alan Joyce was getting the top job and that he was free to leave.
Yesterday's announcement of Gregg's resignation contained the usual platitudes about what a great contribution he had made to the airline, and Gregg's response was as customary in its comments about what a privilege it had been to work there.
But behind all this public relations gloss is an intriguing story about the politics working inside this business and how long-standing relationships between senior management had undergone seismic shifts since the arrival of Clifford.
From numerous conversations with insiders the story unfolds as follows. It's well known that Dixon and the former chairman Margaret Jackson had a particularly close working relationship. Similarly Dixon and Gregg worked in unison. Both maintained a working relationship with Borghetti.
To the extent that there was disharmony, it would have been between Joyce and Borghetti - the former ran the budget upstart, Jetstar, and the latter the Qantas mainline operation. There was an understandable tension between the two as the younger man running the younger airline competed for resources with the traditional full-service airline.
Jetstar was created to capture the leisure market because Qantas mainline had a cost structure that was too high to compete with the lower-cost Virgin.
Before the fuel price began to move into the stratosphere, Jetstar's model was enormously successful and was increasing its contribution to Qantas's overall earnings. However its ability to grow its profits was, in part, due to being part of the overall group.
Qantas would cut back or drop leisure routes which would in turn allow Jetstar to migrate passengers onto its airline.
The situation today is vastly different. The cost of fuel has cast a shadow over the viability of all budget airlines and the full-service carriers that can attract premium business passengers are once again undergoing a renaissance.
Evidence of this will probably be clearer when Qantas announces its results tomorrow.
Meanwhile, it seems that the arrival of Clifford altered the management dynamics.
It became clear to some insiders that Clifford didn't like Dixon's unfettered control of the information process. Clifford, who has a history of being a man who likes to be in control, was not entirely comfortable with Dixon's free rein over the organisation.
For his part, Dixon would like to have stayed on longer and seemed to be attempting to will this outcome by telling the market he would be around until June next year.
Clifford had other ideas.
All the management pieces on the chessboard took their positions.
The most interesting was a change in the relationship between Gregg and Dixon. Gregg was vocal in his criticism of the war with maintenance unions and Dixon wanted to take them on for a monumental battle.
Meanwhile, Dixon had thrown his weight behind Joyce as his favoured successor - a cleanskin without too much political history who would fall in behind Clifford. Dixon, who clearly must have known the writing was on the wall as far as his tenure was concerned, knew he would be able to maintain his legacy if Joyce was anointed.
For Gregg and Borghetti the move signalled, at best, the end of their chief executive aspirations and, at worst, the end of a career at Qantas. For the company it means that two of its three most senior team will be gone within a couple of months, at a time when the industry is facing the greatest challenge in its history.
Interesting times....