Future of Qantas in jeopardy: Joyce (Merged)

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Qantas chairman Clifford denies rift with Joyce

• Steve Creedy
• From: The Australian
• June 04, 2011 12:00AM

QANTAS chairman Leigh Clifford has slammed rumours of a rift with chief executive Alan Joyce as "absolute rubbish" and says there is no board dissension over the company's industrial strategy.

Rumours of a rift and reservations by some board members about the developing battle with the airline's pilots and engineers have been swirling around the industry along with speculation about changes at the top.

But in a forthright interview with The Weekend Australian, Mr Clifford moved to emphatically quash the rumours while emphasising the need for a major revamp of the carrier's beleaguered international operations.

He also attacked the leadership of the pilot and engineering unions for its failure to understand the competitive threats facing Qantas.

As Qantas shares yesterday slumped to $2.03, their lowest point in nearly two years, Mr Clifford said he had worked with Mr Joyce for three years, and as chief executive for two, and enjoyed working with him.

He said the board had discussed in detail the airline's industrial relations issues, particularly the nature of claims by the pilots and the engineers. He and Mr Joyce spoke regularly about the issue although he was "very conscious" the chief executive was running the business". He had also personally canvassed every board member as part of an annual review and given each an opportunity to raise concerns.

"The board is absolutely right behind Alan and very comfortable with how he's running the business," he said. "Now that doesn't mean we're happy with where the business is, but absolutely Alan and I are in lockstep."

Operations at Qantas international are under review as the long-haul airline continues to fail to make a return on capital in the face of increasing competition. At the same time, the airline is also facing industrial action by unions over job security issues.

Mr Clifford said the board was aware of the challenges facing the industry and the directors were "absolutely on the same page about the importance of making changes", including to the loss-making international airline.

"They understand the predicament of the international business and we are looking at alternatives," he said.

"And what I can assure you is it will be different going forward -- make no bones about it, it will be different going forward -- it cannot remain as it is."

Asked whether this included a full-service airline in Asia, Mr Clifford pointed to comments by Mr Joyce that alternatives were being considered.

"We're looking at a variety of alternatives and one of the discussions I've had with Alan is 'let's not constrain ourselves'," he said. "What we've got to do is have something which can ensure the viability of the business going forward and an adequate return on capital and that's not what we're getting at the moment. That's the best way to secure jobs. Writing pieces of paper is not the way to do it, whether you're in the auto industry or any other industry."

The Qantas chairman said he had briefed major shareholders on the airline's situation and they had rightly highlighted their concern about the airline's economic performance, particularly in the international business, as well as the lack of reality in union claims.
He said he was aware the union leadership was briefing analysts but "wise and experienced people" would know the union objective was to create concern and disharmony, and pressure management.

But management already had plenty of pressure from the share price, the profit performance and the encroachment of Emirates and AirAsia.

"We can handle the competitive environment, we can't do it sitting on our hands," he said "We've got to be creative, we've got to be thoughtful and we're willing to do that. That's how we'll respond to the share price and, frankly, I'd say every investor I've spoken to is right behind that."

Mr Clifford said he was also concerned that employees were being misinformed by their union leaders. He said anyone who understood what was going on in the aviation industry understood the magnitude of the challenges facing the company.

"Frankly, I've spent more time on some of those claims than the other board members in discussion with Alan," he said. "You have to say to yourself, 'What planet are these people on given the competitive environment?' Haven't they heard of AirAsia, haven't they heard of the challenges coming from Emirates, from Etihad, from Qatar.

"They only have to speak to Airbus so see what the order books look like to understand some of the challenges

Qantas chairman Clifford denies rift with Joyce | The Australian