The Qantas Plan.... and the options.

[Capt Kremin]

It doesn't seemed to have dawned on many here that the current strategy of Qantas has in effect neutered the thrust of the industrial pushes of both the ALAEA and AIPA.

Qantas management has made it abundantly clear that mainline will contract severely over the next few years. What this does is make any victory by the two associations, Pyrrhic. There is no point heading into PIA to get all red tail flying done under mainline T&C's if mainline flying, particularly international flying, is shrinking.

By starting a new Asian airline and consigning mainline to a slow death, they have bypassed the claims. Now whatever you think of The Plan, and I for one think it foolhardy and ill thought out, that is the current plan that the current management are embarking on.

This leaves (except for a lucky few at the top of the lists) only a few options left for mainline employees:

1. Change airlines,

2. Change careers,

3. Change The Plan by Government intervention, or,

4. Change Qantas management, and by default... The Plan.

Options 1 and 2 are personal choices that may need to be made by individuals on a case by case basis. Only the individual can know what choices are available for them.

Quite a few individuals are working on Option 3. In my experience however, it is the least likely to effect the change necessary. Never underestimate the capacity of large corporations like Qantas to get their way.

Option 4 looms as the wild card. I don't know whether or not the No-Confidence motions that will be put to the AGM will be successful, nor do I know if plans are afoot to attempt to vote down the remuneration packages and cause a Board spill. Either of these options may work but likely not due to the voting power of the major shareholders.

The voting power of the major shareholders however, is something that Qantas employees may need to be seeking to attain themselves. I believe plans are afoot for an employee buyout, and am starting to come around to the viewpoint that this may be the last best hope to rescue Qantas, and the majority of its Australian employees, from the ravages of The Plan.

Qantas employees need the ability for direct input into the running of the company. This may be the way to do this. This will not be a one way street however, and any major investor will demand efficiencies from the employees as a quid pro quo to supplying the necessary capital.

Doubtless that would still mean some job losses. Qantas employees will then need to weigh up the pros and cons.

If The Plan goes ahead in it current form then the next five years will see the end of the 767 fleet with no replacement, the decimation of the 747 fleet also with no replacement, and the stagnation of the A380 fleet at pretty much its current level.

The only growth in ANY fleet MAY come from the transfer of the nine A330's currently with Jestar, to mainline.

There are a little over 300 767 pilots and around 650 747 pilots. With a ballpark figure of 150 pilots to operate 9 747's, that is 800 pilots surplus to requirements, or around 700 pilots surplus if the A330's do come back to mainline.

So the best case scenario is 700 pilots out of a job by 2016. Many of the rest will be demoted.

If an employee buyout demanded efficiencies that put 150 pilots out of a job, but gave the remaining employees seats on the board, a new CEO and at least a new Chairman, plus a cut of the profit; to me it is a no brainer. However I am unlikely to be one of the pilots losing a job in that scenario.

This is going to come up in the very near future. All Qantas employees need to be fully aware of all the options and carefully consider the choices in front of them.

[blueloo]

You forgot Option 5. Bring QF to a grinding halt, thereby preventing the supply of funds to Jetstar and any yet to be formed Asian venture.

I am not sure if in reality its achievable, and what the near term results would be, and whether it would survive.

....but it would make a few people sit up and take notice.

Of course its a nasty gamble, with potential dire consequences - as per previous industrial tactics it could get ugly.

[B772]

Another option is a restructure with a paycut by all Pilots and Engineers, Apparently Joyce has indicated this would solve the problem and enable QF to compete with their opposition and grow the airline.

[Captain Peacock]

We could work for free and it won't change a thing with Joyce.

[noip]

This whole event has nothing to do with Pilots or Engineers salaries or conditions, rather (it would appear), bypassing the Qantas Sale Act.

I'd like to think otherwise, however the ONLY scenario I can think of that explains what the Board has in train for Qantas Airways is that above.



Someone show me it is not the case


N

[Short_Circuit]

This whole event has nothing to do with Pilots or Engineers salaries or conditions, rather (it would appear), bypassing the Qantas Sale Act.No, it's about getting hold of the 3 Billion cash in the bank and running, fast. The Qantas sale Act is just the stumbling block.

[Sunfish]

Excellent analysis by Capt Kremin.

Also excellent point by Captain Peacock:

We could work for free and it won't change a thing with Joyce.

The trouble Qantas has is called Management Group - think. I've seen it before in another industry. Qantas has a behavioral problem in it's strategic thinking that can't be cured without a change of Management and most of the Board.

The management group and Board believe that the entire value of Qantas is encapsulated in the Brand value and the lobbying ability, political connections and business acumen of the Board and management and nowhere else. This was neatly explained by Margaret Jackson when she commented in the media (which I can't find) words to the effect that "The Qantas Board has done more than anyone else to secure the companys future".

This group - think has penetrated into lower management because they take their cue from their seniors, hence the comments elsewhere about smirking managers, comments such as "you will all be gone in a few years", knowing looks and raised eyebrows. I've seen this management behaviour before too.

This is obvious from the studied and deliberate forms of management bastardisation of its employees that Qantas has made into an art form. There are too many incidents for this to be random stupidity. Why announce that a twelve month "study" is being conducted into b737 overhaul with your job contingent on its outcome? Why ferchrissake even announce that QF's future will be determined on 24th August if not to raise stress levels among affected employees? This is deliberate workplace cruelty.

According to this narcissistic model, Qantas employees are faceless, valueless, easily replaceable cogs in the machine. As such, they should shut up, do what they are told and meekly accept what pay the Management deems sufficient for their services. The closest I can explain it is that they regard employees as something like "dogs that can talk" with the implication that any dog that disobeys let alone tries to bite the hand that feeds it will be euthanased. Asian dogs don't talk back and are cheaper than Australian dogs, that is what the move into Asia is about.


..And euthanasia is exactly what they propose, that is what the New Zealand cadets, closing the engine shop, etc. etc is all about. They wish to eliminate any potential source of informal leadership or excellence that does not reside in the Board and Management - because it is a threat to them. They fear it. They want contractors, and fearful ones at that, who will not give backtalk or any sort of challenge.

By way of comment, I will bet a certain part of my anatomy that the Board and Management are so envious of the leadership under pressure shown by the Captain and crew of QF 32 that they are marked men. They should perhaps think about leaving now. Narcissists hate it when the spotlight shines on somebody else and not them.

So what? Qantas is not a sheltered workshop. It is a business that should be making money for its shareholders. Why does what I've said matter a tinkers curse?

The answer to that is very simple. The Board and Management have got it totally and absolutely backwards. The future of the company is in the hands of its pilots, engineers, cabin crew, front line staff, baggage handlers and caterers. It is they who control the brand value, not the Board.

At a catastrophic level, one bad mistake by an engineer or pilot and there is no brand value at all. At a slightly lower level, cabin crew and front - line staff can make or break the airlines reputation with every passenger every day and there is nothing the Board can do about it. Come to think about it, even the caterers can do more to influence brand value than the Board.


But getting back to the issue at hand. You need to understand that Narcissists are bullies at heart. Their behavior springs from deep wellsprings of insecurity and self loathing. Ramping up industrial action a little won't work, they will simply use it as an excuse to get themselves on the TV and breast beat some more about the evil unions and how they alone are standing up to the forces that wish to destroy the national icon which is in mortal danger, etc. etc.. Same goes for political solutions, the Board and CEO would like nothing better than to be called into Julia Gillards office, or the bar of the Senate, for a lecture. They would dine out on that for months ("So I told the Prime Minister that yadda yadda yadda.........")

To put that another way, they crave publicity, even bad publicity. It validates their importance to themselves.

Nope, the only way to nail them is a short sharp shock of some kind, the kind of shock that gets the whole nation saying to themselves "WTF are these guys thinking?", and threatens the Qantas Brand Value, absent a tragedy which no one wants, my guess is that you have to stop them in their tracks, and probably major unrelenting strike action coupled with a masterly advertising campaign is the only way that could happen. You have to get the message across to shareholders that there is no brand value, non, nil, zero, without Australian workers delivering the product because THEY ARE THE ONES THAT DELIVER THE BRAND VALUE, NOT THE BOARD!

Of course if you fail, then in the longer term the airline push into Asia will fail, taking the shareholders capital, the Board and CEO reputations and your jobs with it, but that is cold comfort to you.

Perhaps it might make sense to contrast the behaviour of Rob Fyffe at Air New Zealand with the Qantas management, I guess you could ask the New Zealand unions what their experience has been....

[Beer Baron]

Capt Kremin, I totally agree with the point you have raised that the current QF strategy has essentially bypassed our claims, however I don't think your solution is viable. An employee share buyout will require a significant majority of employees going along with the plan and I do not see this happening.

I attended both the briefing that Lyell Strambi gave to pilots following the August 16 announcement and also the briefing that Alan Joyce and the executive committee gave to all staff after the results were announced; the difference was stark.
At the meeting attended by ~100 pilots there was robust questioning coming form the floor for almost 2 hours before they had to finally close down the meeting. At the meeting for all staff which had more than 4 times as many attendees there was only a smattering of questions and the meeting ended inside it's allotted time frame. One girl in front of me had her head in her hands and appeared to be asleep while another tired of checking facebook and reverted to playing Angry Birds.

What is my point here? Well I don't think the great majority of Qantas staff are as outraged over Qantas's plans as we are. Other departments have been facing redundancies for several years now so this latest announcement is of no greater concern.
While I am sure there are elements within Qantas who would gladly put their money where their mouth is and join in an employee buyout, I feel that those people are unfortunately in the minority.

[Capt Kremin]

I understand all that BB. The differences for Pilots, Engineers and Cabin crew between the two scenarios are stark however.

My best case back of the envelope figures however see LH requiring only 400 captains instead of the current 650. Anyone with a number outside that number in five years time will be demoted, instantly displacing 250 F/O's. There are currently 600 long haul FO's. That will mean 850 pilots in line for only about 350 F/O slots. (Less slots than Capt due training capt numbers). You can see how the numbers begin to cascade.... and this is if redundancies are done in order of seniority and discounting people being displaced in shorthaul.

Can you imagine the legal S***fight if QF wants to go down the Kendells route?

Most pilots in QF should be around 100 numbers further up the totem in 5 years, that is the number of 60 and overs who should be out of the equation, and add to that some natural attrition due medical.

Personally I believe that if The Plan goes ahead many FO's and some Captains will be gone in a year or so and Qantas will have trouble crewing its flights, but this will be transient.

The upheaval will be massive and leave no-one unaffected. That is the future every QF pilot faces under The Plan.

I am not saying a buyout will be the panacea to all ills and life will go on as before, but it does offer an alternative that bears some focused thinking from those who will be affected.

[Keg]

Personally I believe that if The Plan goes ahead many FO's and some Captains will be gone in a year or so and Qantas will have trouble crewing its flights...

It'll be used as an excuse to further cut back on services no doubt.

[mohikan]

Kremin.

Agree with both your scenario and your numbers in relation to redundancies. All of this driven by Cliffords obsession with breaking the unions. He literally will run the airline into the ground to achieve this. Extraordinary.

What I can't work out is why Wilson and Strambi continue to BS about the surplus of 180 "not resulting in redundancies'. Why not come clean with the truth ? If they are going to kneecap 800 guys at least give some a chance to move on with certainty.

Crazy times. Like senior management are living in an alternate reality where nothing matters except ending the mainline pilot body. No matter what the financial and human cost.

[ejectx3]

That's the part I'm at a loss to explain. If they are intent on destroying QF mainline pilots' careers, why not be honest and let us plan our futures?

It's bad enough to be doing it, but why make it harder by lying about it until it is sprung upon us by surprise.

The only explanation is they are out to inflict the greatest damage possible. :ooh:

[Variable Incidence]

All good in theory Capt Kremin, but a buyout is very unlikely or possible.

Younger guys, if they want to have a career in aviation are better off biting the bullet and going off shore now to start the clock ticking to get a command. Promotion has already been incredibly slow in Qantas and will only get worse or even non existent at best. Demotions more likely. Those that have a command but are likely to lose it in a contracting Qantas need to decide whether to stay or go as well!

Airlines are very bad investments at the best of times, let alone now. I for one would be loathe to put what little I have at such risk. Why also would younger guys and girls want to continue to support the lopsided, greedy seniority based culture that our own colleagues at the top so vehemently defend, by putting in capital?

Better I think to take stronger industrial action, embarrass AJ and the board and deter the institutional investors from supporting AJ's Asian wet dream, because that it is all that it is and all it will ever be!!! :bored:

[Jetsbest]

If they were actually honest, a lot of employees would get organised and;
- either damage the company more in the short term (army of one stuff), or
- leave asap (ie too fast) and damage any progression to the new order.

So, it's better to claim that;
- "we're trying to minimise the impact", or
- "we value our pilots/engineers/crew/ground-staff", or
- "here are some LWOP opportunities so you can come back later", or
- "we are not off-shoring jobs, we're creating new ones", or
- whatever.

Such a strategy helps them in several ways. While there is uncertainty rather than cold hard truth and open-ness;
- the optimists stay for the 'inevitable' policy reversal,
- the senior stay because it probably won't affect them (even though they're equally disgusted by the strategy),
- the middle-aged and older stay because it's unlikely another company will take them, and
- it keeps the fence-sitters right where they are because there's not enough hard info to make a definitive career change decision.

It's what the engagements surveys were really about; how are the plans going to be affected by employee attitudes? I suspect that enough employees answered strong affirmatives to loaded statements like "It would take a lot to make me leave Qantas" that it has significantly shaped management's strategy now. :sad:

I'm still optimistic enough to believe that the truth may expose this destructive agenda (Asia or bust, forget the past) and its extremely high risks. I believe there is an inclusive, open and honest option where the employees will want to take part-ownership of making the necessary improvements to the business. I just don't think it can be done in the toxic and aggressive culture demonstrated by management at present. :ugh:

[Oakape]

Why not come clean with the truth ? If they are going to kneecap 800 guys at least give some a chance to move on with certainty.


why not be honest and let us plan our futures?

It's bad enough to be doing it, but why make it harder by lying about it until it is sprung upon us by surprise.


Like Jetsbest said, they don't want anyone to go until they (management) are ready for them to go.

They don't care about you or your career. They don't care if you struggle to put food on the table when they make you redundant & you have no income while you are trying to find another job.

All they care about is maintaining the operation until they are ready to implement the changes they have in mind. When that time comes, they will cut you adrift without a second thought for you or your family.

Modern business practice 101.

[DraggingAir]

My guess is that one strand of The Plan is to introduce a B scale into mainline.

OneStar's recruiting has been slowed over the past year to a near halt. I surmise that the reason is not the attention from the Senate enquiry nor the lousy employment package on offer.

Instead, I think this is a deliberate tactic hatched between BB and AJ. OneStar is expecting to be gifted pilots from mainline, just as they have been gifted many other services, facilities and people over the years.

The domestic fleet will then be run down, and in 2-3 years from now it will be declared too expensive and unsustainable. Sound familiar? In order to address this cost drain on the group, a year later a parallel version of Qantasia will start up in Australia, gifted A320's from the overseas fleet.

Salaries will be the same as the Asian operation - B scale. QF domestic pilots will be offerered the chance to move over to the new operation, knowing that the existing domestic operation has been ringbarked with a clear Use By date in the near future. And they will be told that if they don't want the jobs - pilots from Qantasia will be offered them.

Just a thought.

[Sunfish]

Its may already be too late to act.

Be aware that the normal human response to the behaviour of narcissists is utter disbelief and denial of the fact that they can be so cruel and callous - right up to the second when its their turn for the chopper.

They will do exactly what they appear to be doing and say they are going to do.

If I was a Qantas narcissist, I'd put the gas axe through the aircraft, or get them overseas to a wrecker, as soon as I'd grounded them to make the decision irrevocable, forestalling any last minute protests.

[ALAEA Fed Sec]

A cat can be skinned in so many different ways. I don't think it would be wise of me to list them here though.

[Capt Kremin]

You dont need to buy the entire company to have control. Around 25% would be the magic number. Even 15% may do.

[ALAEA Fed Sec]

The premium for a buyout is from memory only about 20% higher than the current market value. Anyone know what the APA bid was compared to the previous rate?

A 10% stake would get a spot on the Board. 25% could lead to effective control of the company. It is possible.

[breakfastburrito]

Kremin, Sunfish, Jetsbest et al, there has been some real creativity & lateral thinking on this thread. In other circumstances I would say brilliant, but that's not quite appropriate.

Kremin, there is another option that is always on the table, the ANZ option of re-nationalisation, I put it out there to complete the menu of options.

In terms of control, the first & most important hurdle is 10% +1 share. Once this number is achieved, you get a seat at the table, and nobody can do a takeover without you. Don't forget, most QF employees have existing shareholding, I don't have the figures on hand, perhaps someone could post the actual number of shares that have been issued over the years. It still doesn't prevent management crashing the company for its break-up value, which appears to be one of the plausable scenario's.

[ampclamp]

Employee shares I believe are miniscule with regard to voting rights. Just not enough to make dent atm.
FedSec, the average premium for a takeover on the ASX is just north of 30% to the average market price before the takeover was launched. This varies of course, some a lot more, some less.

[Capt Kremin]

BB, re-nationalisation I guess would come under Option 3 but would not be considered by the govt.... unless the company's balance sheet was in extremis. It isn't.

Another option is to resurrect the Sale Act case run by AIPA. This would require a major about-face by the current Exec, as they were elected partially on a platform of stopping it... something in hindsight they may be regretting.

The case was never stopped, just discontinued. It wouldn't take much effort.... just a decent amount of cash to get it going again.

[breakfastburrito]

Kremin, the Sales Act case resurrection would appear to be the choice of options, most bang for the buck & least risk. I suspect the possibility of 700+ pilots facing redundancy will bring a large amount of pressure to bare on the AIPA exec committee to review their decision to discontinue the case.

Qantas did seem very concerned by the Sales Act case (with good reason), I wonder exactly why it was discontinued? Once again, time is not on managements side. Senator Xenophon is now raising the question in a very public manner, the media see to be catching on & the politicians are making very public statements about the Sales Act. The longer this continues, the more evidence will emerge. Open court will lead to all sorts of evidence becoming public. As for the cash, I suspect it will be the best investment a pilot could make.

[Capt Kremin]

It was discontinued for four reasons;

1. Political. If it got up then the front man, the former President would have taken all the glory.

2. Cost. Approx 1 million to run it.

3. Applicability. Doubts over what a win might actually mean at the time.

4. Potential conflict of interest. AIPA at the time was in the process of getting Jetstar pilots into the Association. A win may have meant that Jetstar was illegal (it still may be!).

This 4th one remains the most contentious. However the Jetstar pilots have now seen for themselves what this management is capable of, and the potential offshoring affects them as well. Jetstar Australia seems to be headed down the same route.... offshoring of all expansionary slots.

You would have to speculate what the effects might be if the case was resurrected and Qantas subsidiaries were found to be covered under the Act. It may be that Jetstar would be folded into mainline, the same way that Australian airlines was. Would that be a bad thing for J* pilots considering the alternatives?
You'd have to ask the "A" pilots now in Qantas for that perspective.

[unionist1974]

Capt Kremin , a good thread and to some extent I agree wit your initial post . The two Associations have been sidelined , by Joyce , what is their prize ? should they "win". An employee buyout though is a dream , or I coud think of other more appropriate terms W**K comes to mind .
There is no way any buyout by employees will happen , despite the delusional wishes of a certain Union Official . Time to start negotiating an honourable "peace "and get a deal that leaves the door still open for the future . Otherwise , be prepared to be casualties of the egos of certain Union folk , who are NOT Qantas employees , but will fight the good fight with the last drop of your blood . Yes , I am expecting the Troll allegations etc , anyone who does not toe the insane line that has been running on here for God knows hoe long is always tagged with that .
Time to reflect on where this is going and what you might think in 5 years , not in the emotion and hype of today.

[breakfastburrito]

At around $1,000 a pop to run the case would seem a very reasonable investment. As I said, time is not on managements side. The longer it goes on, the longer everyone can see the management agenda. No pilot employed directly or indirectly by a "Qantas Group" entity can take any comfort in the agenda. I suspect that they will target each group in turn in an unrelenting war against pilots.

I wonder why pilots are targeted for such a beating. One theory would be that pilots actually hold a huge amount of power, and any thought of this is to be beaten out them at every opportunity through a continuous process of denigration, almost ritualistic in nature. Is designed it to leave them as mental dwarf's, scared of their own shadow, cowering in the corner?

[LHLisa]

I am cabin crew. As well as supporting you can I suggest you, your families and friends all individually write to, email, and ring your members of parliament. Regardless of your personal political persuasions, Nick Xenaphon, the Greens - Adam Brandt, and a few labour leaders are supportive of your cause. These are the people who have power. Use them to your advantage. Good luck

[theheadmaster]

$1,000,000 is only a reasonable investment if there is a reasonable chance of success. I would expect a better chance of success lobbying a change to the Act itself, or at least waiting to see what Parliamentary support there is for Senator Xenophon and his proposals.

The $400 per mainline member of AIPA comes close to that $1,000,000 figure though ;)

[ampclamp]

long haul lisa, I second that. I've had contact with at least 4 members and senators. If they dont hear from their constituents they will not act as they think nobody cares.

[73to91]

Interesting


THE construction firm Leighton Holdings will be hit today with a $400 million shareholder class action that relates to its handling of a series of profit downgrades and a $1.2 billion write-down on key projects including Victoria's $2.5 billion desalination plant in Wonthaggi.

The Herald can reveal the class action will be launched this morning by Maurice Blackburn and will be funded by the Singapore litigation funder International Litigation Funding Partners, which recently won a shareholder action against Multiplex worth $110 million.

The allegation is that Leighton misled shareholders and breached the continuous disclosure rules in the timing of its announcement of cost blowouts and project delays at the Victorian desalination plant, Brisbane's $4.2 billion Airport Link and its Middle East operations.

This caused the share price to drop dramatically, wiping billions of dollars off the value of the company.

Read more: Embattled Leighton faces $400m class action (http://www.smh.com.au/business/embattled-leighton-faces-400m-class-action-20110831-1jm4h.html#ixzz1WeAmdiE3)

And who is the CFO at Leighton's ?

[Sunfish]

Mr. Gregg...............................

[Gingerbread]

But what about the AIPA/ALAEA invitation to view the Qantas books - limited as it apparently is - is done in company with a couple of the eagles from MBC?

Pressing the QF execs about cost-shifting in the QF Group and see how forthcoming they are? Or how they react.

I predict a thickening of the brogue that seems to be characteristic of the CEO when under pressure . . .

[WorthWhat]

Sorry Burrito10% +1 share. Once this number is achieved, you get a seat at the table, and nobody can do a takeover without you. Is not enough to save a company from being over taken.

A Scheme of Arrangement where Investors control 75% of the share capital and have majority shareholder support can be suffice.

[breakfastburrito]

Worthwhat, my understanding was that >90% was needed for compulsory acquisition as per the corporations act (http://www.austlii.edu.au/au/legis/cth/consol_act/ca2001172/s664c.html).

I stand corrected, a Scheme of Arrangement can be used for a takeover with >75% of shares voted, however, >90% is still required to acquire the outstanding shares.

The scheme of arrangement still has some some interesting twists:
Most notably, it called for the dumping of a headcount vote applying to schemes of arrangement. Schemes now require approval by 75 per cent of the shares voted - as opposed to the shares on issue - plus the approval of a majority of shareholders that vote on the scheme, the so-called headcount.

By contrast, in takeover bids a bidder must acquire 90 per cent of all shares on issue before moving to compulsory acquisition.
SMH (http://www.smh.com.au/business/reform-plan-calls-for-cutting-power-of-small-shareholders-20100128-n1vf.html)