Full email sent to our members today.
I just wanted to touch base with you all before Qantas make some further adverse announcements tomorrow to explain the message we will be delivering publically. Bear in mind that the press is a funny beast with certain reporters trying to press buttons to draw out comments to suit their papers or shows. I find the easiest form of media to deal with being live interviews where words can’t be taken out of context. Another thing to remember is that you only get a very short few words in, that limit complex explanations about matters such as how and who leases aircraft to Qantas and why many of the ownership structures lead to untraceable persons in the Falkland Islands. The main topics we will discuss related to the announcement will follow the format below with our reasons explained.
Qantas Sale Act Changes
We totally oppose any change to the Act that will allow foreign ownership. Foreign ownership to the point of complete control of Ansett saw it asset stripped and destroyed. The same would happen at Qantas and many of the people at Ansett at the time are now pulling strings within your company. Qantas are currently 38% foreign owned with the cap set at 49%. There is plenty of scope to raise funds offshore now but no buyers are interested because they wouldn’t have the control that would allow them to embark on an asset stripping exercise.
The Qantas Sale Act has been in place since the airline was privatised. Only the current Board and CEO have failed to deliver a profit with the Sale Act in place. When investors brought the airline from Australia they did so knowing there was a Sale Act that placed obligations on the owners. If the owners/investors wanted an airline that was not restricted by the Sale Act they should have brought Virgin shares. Speculative investment in Qantas should not be rewarded for those investors banking on a Government that would be tricked into changes to the Act.
A Government Debt Guarantee
We totally oppose this option also. This would enable Qantas to secure cheaper loans and borrow more money. The current Board have shown they do not understand Aviation enough to know where to invest to make their business viable. Whilst Aviation people would immediately think of upgrading older aircraft to 777 variants that would allow Qantas to fly direct to many overseas destinations, it would be more likely that the current Board would use the money to embark on more ventures into Asia with new Jetstar franchises to add to their failing Jetstar portfolios.
Money not spent in this manner would allow them to offer even lower unsustainable Domestic airfares to continue trying to crush the competition from Virgin in what could only be viewed as an unhealthy airfare war between two men in a battle for the biggest ego. Either way the new loans they would most likely take out would not deliver a profitable sustainable airline, just further debt that would be almost impossible to pay off.
Qantas CEO Future
We have and will be calling for Alan Joyce to move on. It’s not that we have any personal issue with him perse, he is however the face of a Board that have put thousands of Australians out of work and placed Qantas in the dire position they now find themselves. The strategy they have adopted is now risking the employment of 30,000 Australians and someone needs to get out there and state the obvious. If Mr Joyce was to come out and admit that in hindsight the strategy was not working and he was now going to concentrate on the core business he would have our full support but we consider that turn of events highly unlikely.
Removing the CEO is not the complete answer though as most of us would be aware, it is Leigh Clifford, the man who nearly destroyed RIO Tinto with an ongoing war with workers who is a bigger problem. It’s too complicated to double up and also call for his resignation though because the average Australian has never even heard of him.
Jetstar
We fully support the continued operation and ownership of Jetstar in Australia. They have provided a viable option for people shopping for budget travel and have expanded the pool of people willing travel on aircraft within the Qantas Group. We have seen countless examples of Qantas cross subsidising Jetstar Australia operations and don’t really have a problem with that because all the money stays in the Group. We would like the Board to be more open about this though rather than claim that Qantas International are completely unviable when that is not the case.
The Asian Jetstar franchises are killing the whole Group. We estimate that $1B has been wasted chasing double digit growth in growing Asian markets on the assumption that Asian nations and their business leaders will not protect their turf. The return on investment for these ventures has been zero with no light at the end of the tunnel.
ALAEA not Meeting with CEO on Friday
We’ve been to enough of these meetings to know that it will be a waste of time. They will show the same presentation that is released to the stock exchange, ask if we have any questions and then never answer one of them directly. No new information would be forthcoming. Additionally the ACTU people who know nothing about Aviation will take the lead making irrelevant points and limiting what we could say for the sake of harmony. The ACTU would most likely form a position on our behalf backed by big unions with a handful of Qantas members that would lock us into a position that would be to the detriment of our members. We need to conduct our consultation in different forums free from ACTU influence.
If we were present at the Friday meeting it also would mean that every union was present. If that was the case it would allow Qantas to make public comments about “all the unions understanding our issues”. There needs to be one union absent to prevent allowance of these erroneous comments and that will be us.
Loss of Market Share
Qantas claim that there is a constant reduction in the share of passengers willing to fly Qantas Internationally. This is only because Qantas have reduced flights whilst competitors have increased them. We do not accept that the majority of travellers only chose their airline based on price. A vast majority still consider quality, service and safety as the main determining factors they consider when buying a ticket. Generally Qantas may sell tickets 1%-10% higher than competition but when they compete head to head with cheaper competitors, Qantas loads are nearly always higher than the other airline.
Uncompetitive Union Labour and Unco-operative Unions
Qantas will be trying to create the impression that high wages and uncompetitive work practices are to blame and that unions will not co-operate with change. They know this will draw easy support from suckers in the Coalition Government. The ALAEA have demonstrated over a long period of time that we are willing to work with them to make Qantas better. 737 c-check were reduced from 41 days to 19 days because of our work giving them the fastest heavy maintenance turn times in the world. The ALAEA also offered 25% less take home wages at Avalon this year to keep the base open knowing that the difference in price between Avalon and Hong Kong was less than 3%. The Avalon offer was the most generous union offer made in any industry in this country to keep work within Australia but for reasons unknown, it was rejected.
We don’t know what this mob will announce on Thursday but our initial position will be one of co-operation to ensure that jobs are protected. Any consideration of change will only be endorsed after the support of members is attained at membership meetings. We look forward to speaking to you at the Rowers club and other usual venues.
Cheers
Steve P