Should Qantas fail, god for bid, and some other airline, (together with associated supporting investors and the Government), does unexpectedly come to the rescue, don’t expect the Roo to be rebirthed as it is today.
What is going on at the present time with Qantas International is similar to what took place domestically in the US in the 80’s and 90’s after the industry was internally deregulated by President Carter and US airlines had to come to grips with costs determined by a regulated market structure.
In situations where employees remain quite well paid but shareholders then receive deregulated market rates of return, a realignment of shareholder and employee payoffs is inevitable and ultimately necessary for financial survival and job security. IMHO, real question right now ought to be; How to make the transition fairly?
Choices considered by US carriers such as DELTA, NWA & UAL, included, amongst other things:
· Using economic pressure to lower labour costs,
· Using cash flow for alternative business investment,
· Leveraged takeovers, and
· Spin off into LCC’s.
Sounds eerily familar doesn’t it.
In all cases, contested outcomes and plummeting share prices resulted in either widespread layoffs and subcontracting or a significant reduction in wages. In 1985, UAL Pilots took a 29 day strike to resist such pressures and eventually it was recognised in the US that both employees and shareholders had just claims. In the case of United, all employees (other than flight attendants) took a 15% wage reduction in exchange for 55% of United Airlines Stock.