Wirraway
21st Oct 2004, 16:59
Fri "Sydney Morning Herald"
Dixon plots a risky course
By Elizabeth Knight
October 22, 2004
Qantas's Geoff Dixon has always been tough, resourceful and prepared to do what it takes. And right now he reckons what it takes is a major battle with his unionised workforce - a move that has involved training strike-breaking flight attendants to fly long-haul routes.
It's reminiscent of the wharfies dispute that Patrick Corp's Chris Corrigan crushed after he went to the Middle East and trained teams of non-unionised strike breakers.
That was a much bloodier battle and one that needed to be undertaken to bring some competitiveness to the waterfront and general offshore trade.
Plenty didn't agree with Corrigan's tactics but many, including the Coalition Government, were pleased with the outcome. However, those who benefited the most, of course, were Patrick shareholders. That very ugly fight made some shareholders very wealthy.
But there was significant risk attached to taking a highly confrontational stance with the unions. In Patrick's case it could have driven it out of business.
There are also unappealing aspects to Dixon's move to relocate part of his cabin crew to the UK - the most significant of which is the downsizing of the Australian part of the workforce.
According to the unions, Qantas's behaviour amounts to the casualisation of its workforce and the general move to contract out work within Australia and overseas.
Qantas says its workforce is, in a relative sense, on a great wicket, especially when compared with many other international airlines that fell apart after the September 11 terrorist attacks and whose staff were retrenched or had their salaries renegotiated.
The exercise is going to save Qantas $18 million and such productivity improvements are necessary to get the required improvements in growth.
Dixon told his shareholders yesterday that the airline must have contingency plans in the event that unions decide to take industrial action, in order to protect shareholders and the business.
He said he would not make any apologies for taking this action and didn't accept the claim that it was un-Australian. He reckons some unions have been doing their best to damage Qantas commercially.
It's perfectly understandable that staff want to retain salaries levels and working conditions and are prepared to fight hard to do so.
But Dixon is right in this respect; his main airline has a cost base that is higher than many of its competitors. He is also right that government-owned or subsidised airlines are difficult to work against.
Qantas survived September 11 because it got its own free kick - the demise of Ansett. For that reason, it prospered when its international competitors were either going out of business or forced into radical cost restructuring and downsizing.
So Qantas was not in the best position to tackle the new airline phenomenon of the past few years - the launch of the low-cost operator.
Migrating the low-fare passengers and routes on to Qantas's Jetstar was necessary in order to negotiate new wage and work practices deals with the unions.
But relocating staff to the UK is causing significantly more grief from the unions.
(Never a feather appears to be ruffled when major Australian companies move call centres to India and man them from there.)
As far as the unions are concerned, the profit motive is not particularly significant. That's also not surprising because it's only Dixon and his upper management whose lifestyles are affected if shareholder returns are enhanced.
But Qantas is not a basket case and it isn't hanging on by its fingernails. It's a profitable business, but one that is competing for capital with other listed companies in the Australian market.
It's well managed, but it's in an industry that many investors would not even consider because of its long history of commercial failure.
Dixon has done exceptionally well in improving profits to date. But to keep momentum, he needs to be able to make some additional efficiencies and staff is the obvious area for him and for most businesses.
But taking on a major battle with the unions is a risky short-term strategy. Using strike breakers can escalate industrial action and affect short-term profits.
Clearly, this is something that the market is not overly concerned with right now. Dixon's fighting words enhanced the airline's share price yesterday even though he gave no real guidance for the current year's performance.
========================================
Pic: Qantas A330-301 VH-QPB
http://www.jetphotos.net/viewphoto.php?id=305842
========================================
Dixon plots a risky course
By Elizabeth Knight
October 22, 2004
Qantas's Geoff Dixon has always been tough, resourceful and prepared to do what it takes. And right now he reckons what it takes is a major battle with his unionised workforce - a move that has involved training strike-breaking flight attendants to fly long-haul routes.
It's reminiscent of the wharfies dispute that Patrick Corp's Chris Corrigan crushed after he went to the Middle East and trained teams of non-unionised strike breakers.
That was a much bloodier battle and one that needed to be undertaken to bring some competitiveness to the waterfront and general offshore trade.
Plenty didn't agree with Corrigan's tactics but many, including the Coalition Government, were pleased with the outcome. However, those who benefited the most, of course, were Patrick shareholders. That very ugly fight made some shareholders very wealthy.
But there was significant risk attached to taking a highly confrontational stance with the unions. In Patrick's case it could have driven it out of business.
There are also unappealing aspects to Dixon's move to relocate part of his cabin crew to the UK - the most significant of which is the downsizing of the Australian part of the workforce.
According to the unions, Qantas's behaviour amounts to the casualisation of its workforce and the general move to contract out work within Australia and overseas.
Qantas says its workforce is, in a relative sense, on a great wicket, especially when compared with many other international airlines that fell apart after the September 11 terrorist attacks and whose staff were retrenched or had their salaries renegotiated.
The exercise is going to save Qantas $18 million and such productivity improvements are necessary to get the required improvements in growth.
Dixon told his shareholders yesterday that the airline must have contingency plans in the event that unions decide to take industrial action, in order to protect shareholders and the business.
He said he would not make any apologies for taking this action and didn't accept the claim that it was un-Australian. He reckons some unions have been doing their best to damage Qantas commercially.
It's perfectly understandable that staff want to retain salaries levels and working conditions and are prepared to fight hard to do so.
But Dixon is right in this respect; his main airline has a cost base that is higher than many of its competitors. He is also right that government-owned or subsidised airlines are difficult to work against.
Qantas survived September 11 because it got its own free kick - the demise of Ansett. For that reason, it prospered when its international competitors were either going out of business or forced into radical cost restructuring and downsizing.
So Qantas was not in the best position to tackle the new airline phenomenon of the past few years - the launch of the low-cost operator.
Migrating the low-fare passengers and routes on to Qantas's Jetstar was necessary in order to negotiate new wage and work practices deals with the unions.
But relocating staff to the UK is causing significantly more grief from the unions.
(Never a feather appears to be ruffled when major Australian companies move call centres to India and man them from there.)
As far as the unions are concerned, the profit motive is not particularly significant. That's also not surprising because it's only Dixon and his upper management whose lifestyles are affected if shareholder returns are enhanced.
But Qantas is not a basket case and it isn't hanging on by its fingernails. It's a profitable business, but one that is competing for capital with other listed companies in the Australian market.
It's well managed, but it's in an industry that many investors would not even consider because of its long history of commercial failure.
Dixon has done exceptionally well in improving profits to date. But to keep momentum, he needs to be able to make some additional efficiencies and staff is the obvious area for him and for most businesses.
But taking on a major battle with the unions is a risky short-term strategy. Using strike breakers can escalate industrial action and affect short-term profits.
Clearly, this is something that the market is not overly concerned with right now. Dixon's fighting words enhanced the airline's share price yesterday even though he gave no real guidance for the current year's performance.
========================================
Pic: Qantas A330-301 VH-QPB
http://www.jetphotos.net/viewphoto.php?id=305842
========================================