And Qantas (mis)Management reckon pilots are overpaid and underworked

[max autobrakes]

27. The Qantas memorial board seat at Leighton

By Glenn Dyer and Stephen Mayne

Is there a Qantas memorial board seat at Leighton Holdings, the country's biggest contractor? The question arises after Leighton announced yesterday that Qantas chief financial officer, Peter Gregg, would become a director. He replaces Qantas CEO Geoff Dixon, who resigned from the Leighton board six weeks ago to become a director of PBL where executive chairman, James Packer, is a director of Qantas.

Talk about cosy cross-directorships. This Sydney shuffling is a bit like Melbourne in the bad old days, although it might indicate that Gregg is winning the battle with executive general manager John Borghetti to succeed Dixon when he eventually retires.

Surely Gregg should be too busy to have an outside directorship. It's one thing for a CEO to pick up a board seat as he heads towards retirement – Ted Kunkel at Billabong and Roger Corbett at Fairfax are two examples – but quite another to start landing them before even making it into the top job.

For some strange reason Qantas has been a pioneer of this trend, perhaps reflecting the desires of chairman Margaret Jackson, Australia's board hopper par excellence.

Jackson bailed from her two most disastrous boards, BHP and Pacific Dunlop, on 28 April 2000, the same day she was anointed as Gary Pemberton successor in the chair at Qantas. All this stuff about being too busy looked rather odd when she joined the Gold Coast-based Billabong board ten weeks later – far removed from the painful memories of chairing the audit committees at BHP and PacDun as billions were written off.

Amongst brief stints at John Fairfax and Southcorp, Jackson has also been on the ANZ board continuously for 12 years. Was it Jacko's influence on the ANZ board that saw then Qantas finance director Garry Twomey take up a board seat with the bank in 1999? Twomey was subsequently passed over for Geoff Dixon and defected to Air New Zealand which ended up costing ANZ plenty when Ansett collapsed and caused embarrassment all round. Finance directors have been rare beasts on other boards since all this happened.

Qantas is facing pressure on earnings from higher oil prices and the A380 delays debacle. Compensation and a possible replacement aircraft deal has to be negotiated as its shares fell below $3 for the first time in three years. That surely is enough to keep the airline's finance director busy at the Mascot headquarters with no time to journey into North Sydney/St Leonards for Leighton board meetings.

[Lucius Vorenus]

Sorry Max, we're not all AIPA COM members and don't have access to AIPA webmail.

Could we use yours?

[max autobrakes]

Havn't you retired on medical grounds Lucius? or was that loss of licence?
How's the beach?

[max autobrakes]

PS Lucius, there is such a thing as Media Monitoring you know

[max autobrakes]

Maybe this might further whet your appetite, Lucius



Qantas and Jetstar don't mix
Elizabeth Knight
August 9, 2006

IF GEOFF DIXON at Qantas really wants to gouge the costs out of his business and maintain growth, he is going to have to devise a plan to split the company in two: Qantas and Jetstar.

In order to achieve his expansion ambitions, both airline brands will need to be housed separately - in two stockmarket vehicles.

There will need to be some affiliation through some common ownership - maybe via a parent company which retains a controlling stake in Jetstar - so synergies can be maintained and Dixon can retain his job as puppeteer.

While the Qantas board might view this as far too radical a move, the fact is higher fuel prices are here to stay and the company needs restructuring.

Cost-cutting alone does not ensure growth and spinning off Jetstar would provide the company with some handy extra capital for future expansion, most probably into freight.

Indeed, Qantas's chief financial officer, Peter Gregg, and its chairwoman, Margaret Jackson, have both been on the hustings in the past couple of weeks highlighting the financial challenges Qantas faces in this new environment of high fuel costs.

Gregg went so far as to say that the company has identified $1.2 billion of savings on top of what had already been planned. He outlined a series of strategies such as Jetstar's international expansion, changes in engineering maintenance, restructuring of catering, international fare simplification and online bookings.

It's a good start but it's not enough to offset the fuel price rise that Jackson predicted would be $3.9 billion more in 2006-07 than in 2002-03.

Dixon has done a mammoth job cutting costs during this period. Whether you view this as a good or a bad thing depends on whether you are a shareholder or an employee.

Much of the work has been done through industrial relations. To achieve such a large change in wage rates and work practices, the business has had to develop a new low-cost airline with a low-cost base, Jetstar.

This may have cannibalised its mainline Qantas domestic airline but that was the plan. Transferring the low-fare-paying travellers to an airline with a cheaper operating structure seemed like a radical way to overcome a wage and work practices problem. It was.

Qantas is now extending this model to its international business. Cheap Jetstar flights to offshore destinations make just as much sense, as long as they are executed effectively.

But all these strategies have been factored into the original cost-savings estimates.

Further migration to Jetstar has to be achieved and structural separation is one way to get the outcome.

Meanwhile, Qantas has already made it clear that expanding its freight business will be one leg of its growth strategy. And, as we are on the verge of a major upheaval in this market as a result of the successful takeover by Toll Holdings of Patrick Corp, it is only a matter of time before Qantas makes it clear how it is going to feature in these strategic developments.

Next week Qantas will announce its full-year earnings and, hopefully, provide some clarity on how it's going to tackle the huge challenge of maintaining or improving its earnings.

Right now the company does not meet its cost of capital and, although successful when compared with other airlines, it is not the sort of investment that can be favourably compared with many Australian industrial companies. But these non-airline companies are the ones with which Qantas is competing for capital.

Qantas has staged a highly successful political campaign to protect the lucrative international routes it dominates but it can't rely on this kind of nationalism forever.

The cost of fuel is disabling the business and it needs CPR (cardiopulmonary resuscitation). Shifting maintenance and improving catering won't do it, nor will moving more heavily into the freight business. Qantas has to take big steps to address a structural change in its cost base.

The management and board have shown themselves willing to take large steps in the past to address the issue of legacy costs and perhaps next week we may see if they still have the nerve.

Further migration to Jetstar has to be achieved and structural separation is one way to get the outcome.

Meanwhile, Qantas has already made it clear that expanding its freight business will be one leg of its growth strategy. And, as we are on the verge of a major upheaval in this market as a result of the successful takeover by Toll Holdings of Patrick Corp, it is only a matter of time before Qantas makes it clear how it is going to feature in these strategic developments.

Next week Qantas will announce its full-year earnings and, hopefully, provide some clarity on how it's going to tackle the huge challenge of maintaining or improving its earnings.

Right now the company does not meet its cost of capital and, although successful when compared with other airlines, it is not the sort of investment that can be favourably compared with many Australian industrial companies. But these non-airline companies are the ones with which Qantas is competing for capital.

Qantas has staged a highly successful political campaign to protect the lucrative international routes it dominates but it can't rely on this kind of nationalism forever.

The cost of fuel is disabling the business and it needs CPR (cardiopulmonary resuscitation). Shifting maintenance and improving catering won't do it, nor will moving more heavily into the freight business. Qantas has to take big steps to address a structural change in its cost base.

The management and board have shown themselves willing to take large steps in the past to address the issue of legacy costs and perhaps next week we may see if they still have the nerve.

[Lucius Vorenus]

max,

Thanks for the SMH article.

Basically it says what I have been saying all along i.e.
Right now the company does not meet its cost of capital and, although successful when compared with other airlines, it is not the sort of investment that can be favourably compared with many Australian industrial companies. But these non-airline companies are the ones with which Qantas is competing for capital.

Qantas has staged a highly successful political campaign to protect the lucrative international routes it dominates but it can't rely on this kind of nationalism forever.

The cost of fuel is disabling the business and it needs CPR (cardiopulmonary resuscitation). Shifting maintenance and improving catering won't do it, nor will moving more heavily into the freight business. Qantas has to take big steps to address a structural change in its cost base.

The management and board have shown themselves willing to take large steps in the past to address the issue of legacy costs and perhaps next week we may see if they still have the nerve.
Now you, Ian, prefer to rant about board seats when in fact we are paying you to be worrying about preventing a Jetstar takeover of Qantas.

But when a pilot group insists on looking as far as it's navel and being so precious: "look at me, aren't I so clever, I'm a Qantas pilot" people like you prosper.

At least we're putting it to the company, right guys?

Too bad if the "company" we're putting it to disappears.....

[Mud Skipper]

Lucius,

Names... please, your fictional character name suggests you have a tendency for self laceration (http://www.themovienetwork.ca/rome/characters.php), are you trying to go to the lions for a while?

[max autobrakes]

Hey Lucius,
If the company is in such financial straights, why do the executive keep voting themselves bigger and bigger pay rises? :eek:
How about your block of flats every 2 years? :ooh: Your statement not mine!

[max autobrakes]

PPS Lucius ,how can you be paying anything towards the upkeep of the association?
You're a life member aren't you?:\

[Shot Nancy]

I just love an "outing" thanks max.

[Lucius Vorenus]

max,

If the company is in such financial straights, why do the executive keep voting themselves bigger and bigger pay rises? 1. To loudly complain about how much someone else is paid only draws attention to how much you are paid.

2. Businesses pay what the market demands...(follow that one through to your job).

3. If you don't like what somebody is paid then, if you are a shareholder, why not stand up and make a speech at the next AGM? Move a motion.

how can you be paying anything towards the upkeep of the association?
You're a life member aren't you? My membership fees are well and truly paid.

It is not healthy to have paid employees or leaders of Unions anonomously massaging opinion of their members.

[Eagleman]

The Fin Review's BOSS True Leaders list for this year was published this morning.

The question was asked, "is Dixon a true leader?" The answer. Yes, yes and yes again. The panel went on to state "it's precisely because he's so tough that Dixon need to be on the list". Peter Forbes, one of the panellists, described him as "exceptional".


And here we are on PPrune saying he is hopeless! :uhoh:

The panel also voted former QF CIO, Fiona Balfour, as one of the True Leaders. :eek:

Now I know who is right!!!! :ok:

I just wonder if it has anything to do with an advertising budget? :hmm:

[argusmoon]

Ms Balfour presided over the mess known as EQ.The cost so far 200mil...and it still doesnt bloody work.
To be a great leader requires intellect,motivational skills and vision.
What does "tough"mean ?
Perhaps there is another Geoff Dixon out there that we dont know about.
In waste haulage maybe?:confused:

[Wed Webbing Woop]

Argusmoon, you're on the money re: Ms Balfour. EQ is yet another example of gross incompetence from Qantas mismanagement. They were sold a total piece of crap from IBM, its no wonder they have been given the flick as our IT provider..........now for some Indian company to take over ( already signed off )
I had the pleasure(sic) of hearing Ms Balfour speak at Staff Roadshow one time. Her incompetence made Strop look like a genius.She bumbled and mumbled her way thru more lies, spin and deceit ( the usual fodder) Telstra can have her..........Good riddance-watch their share price slump even more now.
By the way-Darth Dixon is on Business Sunday tomorrow ( Sunday 13/08) morning at 0800 ahead of Thursdays AGM.
From my perusal of the AFR this week, looks like the Rat will be going into Freight in a BIG way. This has got to be a winner-nil customer service, nil pesky Unions, no people management+ no Engagement Surveys ......all this adds up to more KPI bonuses for the "mighty midgets".
As we say at EP's-Brace, Brace , Brace.........Heads Down , Stay Down!!

[Sunfish]

Ummmm, if Qantas is not "meeting its cost of capital' then the share price falls until it does. Trying to say that revenues must grow until it does is rubbish. It's like me complaining that my hamburger business does not make enough money so I fire the staff and raise prices.

Oh! I forgot! Qantas is effectively a monopoly that can raise its prices when it likes.

Perhaps the latest security scares will reduce the impulse to travel and finally put a stake through the heart of monopolies like Qantas.