No-frills kangaroo ready to hop
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F**k it sh1ts me. Couldn't agree with you more Kap M. Wouldn't it be nice if CEO's and like where put on the same pay as the drivers. Tipping we'd see a rather aggressive increase in the pay scales. They're all ****s. (rhymes with name for a small boat).
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30,000 employees, annual turnover of billions of dollars, worldwide operations that run 24/7/365, capital infrastructure of billions of dollars that requires constant re-investment, profit margins that are less than 5 cents in the dollar even in a good year - tough business, and one that definitely requires management of the highest quality.
Dixon has been voted Australia's best CEO. To my mind, his greatest quality is that he can see the writing on the wall and is prepared to make a hard decision and take action before the red ink begins to flow.
Its very easy to knock but the comments on this forum indicate a lack of understanding of any commercial enterprise, let alone a major international airline.
To my mind, if anything, Dixon and his team are underpaid rather than overpaid.
What is a CEO worth? Maybe the many of you who'll disagree with me could provide a figure and then a justifiable basis on which you calculate it.
Standing by for the usual spray of invective and vitriol, not to mention quotation marks...
Dixon has been voted Australia's best CEO. To my mind, his greatest quality is that he can see the writing on the wall and is prepared to make a hard decision and take action before the red ink begins to flow.
Its very easy to knock but the comments on this forum indicate a lack of understanding of any commercial enterprise, let alone a major international airline.
To my mind, if anything, Dixon and his team are underpaid rather than overpaid.
What is a CEO worth? Maybe the many of you who'll disagree with me could provide a figure and then a justifiable basis on which you calculate it.
Standing by for the usual spray of invective and vitriol, not to mention quotation marks...
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Gotta agree with Tiger here (who, it should be reiterated, is talking about top, not middle level management).
Without a good leader, the whole company can go down screaming more quickly than you can say 'boo'. Underpinned by a strong balance sheet (a hallmark of the current QF CEO), however, it has a lot more room to evolve organically, rather than as a last-ditch effort to save all or some parts of its business from that 'red ink' (the latter situation certainly doesn't apply to Qantas at this time, despite the inroads made by Virgin).
My armchair take on the LCC would be that, relative to the overall scale of QAN's operations, it's really only a drop in the ocean, and if things don't go to plan (I'm sure they will though - don't think for a minute that they havent had a significant number of analysts and experts crunching every possible contingency, especially in lieu of the risks involved ('Go' et al)) they could probably revert to the status quo fairly seamlessly, with minimal overall losses.
Who knows, though.
Without a good leader, the whole company can go down screaming more quickly than you can say 'boo'. Underpinned by a strong balance sheet (a hallmark of the current QF CEO), however, it has a lot more room to evolve organically, rather than as a last-ditch effort to save all or some parts of its business from that 'red ink' (the latter situation certainly doesn't apply to Qantas at this time, despite the inroads made by Virgin).
My armchair take on the LCC would be that, relative to the overall scale of QAN's operations, it's really only a drop in the ocean, and if things don't go to plan (I'm sure they will though - don't think for a minute that they havent had a significant number of analysts and experts crunching every possible contingency, especially in lieu of the risks involved ('Go' et al)) they could probably revert to the status quo fairly seamlessly, with minimal overall losses.
Who knows, though.
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As far as Jetconnect as a LCC I'm surprised on-one has mentioned the Ansett conection there.The Chief pilot and the majority of pilots are ex-Ansett drivers,some of aircraft are even ex-AN .They,ve all learned to adapt to LCC salaries ,no staff travel.no Super etc and most would love to be home .
Food for thought anyway!
Food for thought anyway!
Moderate, Modest & Mild.
Pray tell, Flying Tiger, where are these clever ideas that Mr Dixon can lay claim to, as being uniquely his?
Rather than uniting QANTAS employees, he is dividing them, indicating - imo - an INability to be able to successfully negotiate with his charges.
Instead he has chosen the easy way out. Break QANTAS up into small parcels (creating many more management positions along the way), to get out of current employee work contracts and conditions, ala point76's post..."LCC salaries ,no staff travel.no Super etc".
In a sentence "Screw the employees", whilst continuing to richly reward yourself.
The lcc concept is apparently a COPY of Brett Godfrey's Virgin Blue - and NOT a Geoff Dixon "special".
Given the funds to which he has access there are probably at least a dozen or more other people who could make the same "bold move and hard decisions".
Hard for whom?
The soon-to-be unemployeds??!!
IMO the QF staff deserve better than they're going to get - but Dixon appears unable or unwilling to spend time on trying to do the right thing.
Rather than uniting QANTAS employees, he is dividing them, indicating - imo - an INability to be able to successfully negotiate with his charges.
Instead he has chosen the easy way out. Break QANTAS up into small parcels (creating many more management positions along the way), to get out of current employee work contracts and conditions, ala point76's post..."LCC salaries ,no staff travel.no Super etc".
In a sentence "Screw the employees", whilst continuing to richly reward yourself.
The lcc concept is apparently a COPY of Brett Godfrey's Virgin Blue - and NOT a Geoff Dixon "special".
Given the funds to which he has access there are probably at least a dozen or more other people who could make the same "bold move and hard decisions".
Hard for whom?
The soon-to-be unemployeds??!!
IMO the QF staff deserve better than they're going to get - but Dixon appears unable or unwilling to spend time on trying to do the right thing.
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Er, Kap M, not quite sure where you get the idea that I was claiming Dixon had produced any type of unique proposal. Maybe your usual prolific use of quotation marks is the only way you can prevent yourself from misrepresenting others.
You appear to be rooted in a far more genteel, post war, pre-deregulation era when the proliferation of state owned carriers and excessive regulation led to airlines with huge, bloated bureaucracies and endemic inefficiencies. Naturally, this resulted in enormous salaries and generous conditions for pilots, flight attendants and other employees. This was a worldwide phenomenon.
The breaking down of these barriers in a more liberalised environment has beem retarded buy infrastructure constraints which have prevented the LCC's from developing the critical mass required to force rapid change in the market.
This has been solved overseas by the use of secondary airports, but the lack of such facilities in Australia meant that an LCC could only prosper by the demise of an incumbent. Sadly this was Ansett.
But now with a robust, efficient and ambitious competitor, Qantas has no option but to be proactive and be the driver of change before its too late. Anyone with commercial nous will tell you that a $500m profit on turnover of over $20b, with future capital commitments of greater than $10b, is simply not enough. The only way to sustain such borrowings is to increase the share price, and hence the market capitalisation, to a point where financial institutions are prepared to provide finance on terms which allow the airline to commercially facilitate the investment.
To prosper in such an environment and produce the results required, you must have strong, capable management who are paid absolute top dollar. Geoff Dixon is a long way from the highest paid CEO in Australia but has been voted number 1 by his peers. We are getting him for a steal and I say double his pay.
I can see the writing on the wall and I'm off to work for one of Q's LCC's as soon as possible.
Your implication that inefficient conditions and salaries can be retained whilst at the same time staving off competition and continuing growth is somewhat counter intuitive.
Please take the time to advise us all of how exactly you would deal with the changing situation in the market and exactly how you would negotiate with the 14 unions to address this issue.
Your solutions are keenly anticipated.
You appear to be rooted in a far more genteel, post war, pre-deregulation era when the proliferation of state owned carriers and excessive regulation led to airlines with huge, bloated bureaucracies and endemic inefficiencies. Naturally, this resulted in enormous salaries and generous conditions for pilots, flight attendants and other employees. This was a worldwide phenomenon.
The breaking down of these barriers in a more liberalised environment has beem retarded buy infrastructure constraints which have prevented the LCC's from developing the critical mass required to force rapid change in the market.
This has been solved overseas by the use of secondary airports, but the lack of such facilities in Australia meant that an LCC could only prosper by the demise of an incumbent. Sadly this was Ansett.
But now with a robust, efficient and ambitious competitor, Qantas has no option but to be proactive and be the driver of change before its too late. Anyone with commercial nous will tell you that a $500m profit on turnover of over $20b, with future capital commitments of greater than $10b, is simply not enough. The only way to sustain such borrowings is to increase the share price, and hence the market capitalisation, to a point where financial institutions are prepared to provide finance on terms which allow the airline to commercially facilitate the investment.
To prosper in such an environment and produce the results required, you must have strong, capable management who are paid absolute top dollar. Geoff Dixon is a long way from the highest paid CEO in Australia but has been voted number 1 by his peers. We are getting him for a steal and I say double his pay.
I can see the writing on the wall and I'm off to work for one of Q's LCC's as soon as possible.
Your implication that inefficient conditions and salaries can be retained whilst at the same time staving off competition and continuing growth is somewhat counter intuitive.
Please take the time to advise us all of how exactly you would deal with the changing situation in the market and exactly how you would negotiate with the 14 unions to address this issue.
Your solutions are keenly anticipated.
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Kaptin M, the problem with your synopsis is that Geoff Dixon has been vigorously targeting middle management in his restructure. He has numerous times identified the bureaucracy at QF as being the biggest impediment to change. You know, those "water lilies" you are always on about?
Geoff Dixon is not there to work for his employees, nor is Brett Godfrey or any other CEO is Australia. They work for the board and by extension the shareholders. Brett Godfrey's employers are obviously very happy with him. Geoff Dixon's employers are also clearly very happy with him.
You can't just base your arguments on ideology. Reality has a habit of dismissing dogma.
Geoff Dixon is not there to work for his employees, nor is Brett Godfrey or any other CEO is Australia. They work for the board and by extension the shareholders. Brett Godfrey's employers are obviously very happy with him. Geoff Dixon's employers are also clearly very happy with him.
You can't just base your arguments on ideology. Reality has a habit of dismissing dogma.
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I'm not in the airlines industry..so please criticise me!
But the way I see the future for the Australian airline industry is that it will go the way of G.A.
The good thing is that there will be growth amid economic uncertainies. Like G.A, the airline industry may be able to cope with economic ups and downs in the future.
It will be great for the industry, new equipment and more jobs. It will be bad for the current employee's as pay will ultimately go down. It's a trade-off more jobs and more turn-over equals less fat-bastard jobs (i.e overpaid). On the down side the unions may perish as pilots and engineers get lower wages. Lets face it, when YOU buy an airline ticket you don't know if the pilot or engineer who pilots/maintains the aircraft is a veteren or a newcommer. That's because your pilot will be the one who passed the checkride and who was the cheapest. You get what you pay for. The people who will make the honey money are the managers and the shareholders.
To counteract the ultimate wage decrease for operational personel (pilots, enginneers, flight attendants, ground crew, ops crew) then the unions and members will have to unite or lose out. Before too long aviation personnel will be more like contractors than employees. If the current airline personnel and unions got talking then maybe you could stop the changing trends...amidst market forces. If it haden't been for 9/11, terrorism and S.A.R.S then maybe we would still have a two airlines premium market, but it's now going the way of the supermarkets....big and cheap.
On the other hand there will be more growth and more jobs. It will be great for the travelling public. Look at the fares now. It's finally cheaper to fly than to drive, it's also faster and saves YOU the stress of driving.
Since I'm in G.A it doesn't really bother me which way it goes...that word again ..go. For the guys and girls at the top, you'd better start excercising...cause in the near future your going to have to be flexible.
My thoughts
U2
But the way I see the future for the Australian airline industry is that it will go the way of G.A.
The good thing is that there will be growth amid economic uncertainies. Like G.A, the airline industry may be able to cope with economic ups and downs in the future.
It will be great for the industry, new equipment and more jobs. It will be bad for the current employee's as pay will ultimately go down. It's a trade-off more jobs and more turn-over equals less fat-bastard jobs (i.e overpaid). On the down side the unions may perish as pilots and engineers get lower wages. Lets face it, when YOU buy an airline ticket you don't know if the pilot or engineer who pilots/maintains the aircraft is a veteren or a newcommer. That's because your pilot will be the one who passed the checkride and who was the cheapest. You get what you pay for. The people who will make the honey money are the managers and the shareholders.
To counteract the ultimate wage decrease for operational personel (pilots, enginneers, flight attendants, ground crew, ops crew) then the unions and members will have to unite or lose out. Before too long aviation personnel will be more like contractors than employees. If the current airline personnel and unions got talking then maybe you could stop the changing trends...amidst market forces. If it haden't been for 9/11, terrorism and S.A.R.S then maybe we would still have a two airlines premium market, but it's now going the way of the supermarkets....big and cheap.
On the other hand there will be more growth and more jobs. It will be great for the travelling public. Look at the fares now. It's finally cheaper to fly than to drive, it's also faster and saves YOU the stress of driving.
Since I'm in G.A it doesn't really bother me which way it goes...that word again ..go. For the guys and girls at the top, you'd better start excercising...cause in the near future your going to have to be flexible.
My thoughts
U2
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Just a few thoughts, mostly along the lines of what is a LCC and where can the savings be made:
- management salaries (yep I agree here)
- tech crew salaries (also here)
- cabin crew salaries (more later on this one)
- efficient aircraft fleet
- not many other places (as fuel, leases, fees, etc are not neg)
Pigs Arse talked about multiple types. As far as I can see the big Q is currently heading down the AN path from Sir Peter days...almost one of everything!! This is just not efficient due:
- type ratings (tech, and engineering)
- crewing (due type rating problems/ costs)
- and as Pimp Daddy suggested spares, etc, etc
Tech crew. The tech crew will be either "new" LCC employees if the management team can dream up a way to keep mainline crew from having a heart attack, otherwise I find it difficult to believe that QF mainline tech crew will be operating.
Cabin Crew. TAY 611, you have hit the nail on the head with this one. Incorporate the LCC in NZ (even as JetConnect) and you can have one less cabin crew per aircraft!! Now we are starting to talk savings; salary, super, annual leave, sickleave, overnights, overnight allowances, roster costs, etc, etc
To get it right QF has to use the existing management (and all other infrastructure) for the LCC, not duplicate.
Interesting: Alan Joyce at 37 is about the same age as Brett Godfrey when DJ started.
Also, Douglas Mcdonnell, what exactly is a "high capacity OAC". As far as I know there is only an AOC, they just happen to have high capacity aircraft on the register.
- management salaries (yep I agree here)
- tech crew salaries (also here)
- cabin crew salaries (more later on this one)
- efficient aircraft fleet
- not many other places (as fuel, leases, fees, etc are not neg)
Pigs Arse talked about multiple types. As far as I can see the big Q is currently heading down the AN path from Sir Peter days...almost one of everything!! This is just not efficient due:
- type ratings (tech, and engineering)
- crewing (due type rating problems/ costs)
- and as Pimp Daddy suggested spares, etc, etc
Tech crew. The tech crew will be either "new" LCC employees if the management team can dream up a way to keep mainline crew from having a heart attack, otherwise I find it difficult to believe that QF mainline tech crew will be operating.
Cabin Crew. TAY 611, you have hit the nail on the head with this one. Incorporate the LCC in NZ (even as JetConnect) and you can have one less cabin crew per aircraft!! Now we are starting to talk savings; salary, super, annual leave, sickleave, overnights, overnight allowances, roster costs, etc, etc
To get it right QF has to use the existing management (and all other infrastructure) for the LCC, not duplicate.
Interesting: Alan Joyce at 37 is about the same age as Brett Godfrey when DJ started.
Also, Douglas Mcdonnell, what exactly is a "high capacity OAC". As far as I know there is only an AOC, they just happen to have high capacity aircraft on the register.
Last edited by PAX; 18th Oct 2003 at 20:35.
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CEOs
Flying Tiger
You might get more sympathy about the 'worth' argument if it was a 2-way street. What upsets me most about executive remuneration is the lack of downside. How do I get a gig where when things are going well (and by going well, I mean you could just be lucky- like have your biggest competitor fall over- or you just go on the cost-cutting merry go 'round, not actually adding value or making decisions that grow the business, just pulling down others pay and conditions) I get people lining up to tell me how good I am and how I should get double the money? Then if I stuff it up, destroying not only shareholder value but the lives and livelyhoods of countless others, I get a great, big, fat cheque to pay out my contract and see me on my way (to the next company ripe for the pillaging)?
Australia used to walk in the middle ground between, say, the US and the UK (in IR terms). We lean ever closer to the US these days. Read a Michael Moore book and see if that's what you want.
Call me cynical, but isn't starting an "all new, low-cost, totally seperate company" just a lot of smoke and mirrors for re-writing (downwards) your EBAs, corporate culture, etc, in one foul swoop? The funny part is some people actually seem glad for these 'opportunities'. If they called a spade a spade and said; "we are going to sack a lot of the staff at short haul, and hire some new faces at half the pay and doing twice the jobs" would people still be so glad?
It seems so.
You might get more sympathy about the 'worth' argument if it was a 2-way street. What upsets me most about executive remuneration is the lack of downside. How do I get a gig where when things are going well (and by going well, I mean you could just be lucky- like have your biggest competitor fall over- or you just go on the cost-cutting merry go 'round, not actually adding value or making decisions that grow the business, just pulling down others pay and conditions) I get people lining up to tell me how good I am and how I should get double the money? Then if I stuff it up, destroying not only shareholder value but the lives and livelyhoods of countless others, I get a great, big, fat cheque to pay out my contract and see me on my way (to the next company ripe for the pillaging)?
Australia used to walk in the middle ground between, say, the US and the UK (in IR terms). We lean ever closer to the US these days. Read a Michael Moore book and see if that's what you want.
Call me cynical, but isn't starting an "all new, low-cost, totally seperate company" just a lot of smoke and mirrors for re-writing (downwards) your EBAs, corporate culture, etc, in one foul swoop? The funny part is some people actually seem glad for these 'opportunities'. If they called a spade a spade and said; "we are going to sack a lot of the staff at short haul, and hire some new faces at half the pay and doing twice the jobs" would people still be so glad?
It seems so.
Last edited by ferris; 18th Oct 2003 at 20:54.
Moderate, Modest & Mild.
bitter balance you raise an interesting point with your statement, "Geoff Dixon is not there to work for his employees... for the board and by extension the shareholders.".
Interestingly enough, I had intended to raise this very issue when I next posted, by asking, "To whom should Mr Dixon weight his responsibilities - the QF employees, or the shareholders?"
So exactly who ARE the shareholders?
Can they be defined as one constant, defined group? Or are they an ever changing, indistinct, multiplex?
Do shareholders have any loyalty to a company? Or are they basically, purely reward/profit driven?
Are shareholders individually able to directly influence the base source of revenue for the company on a day to day basis?
Would a 100% turnover of shareholders in say a 12 month period, affect the earning potential for QF during that time?
Now ask the same questions, replacing "shareholders" with "employees".
Let's be quite honest - 1 or 2 p!ssed off Mum & Dad shareholders are not going to have ANY effect on a company the size of QANTAS - the same cannot be said of employees.
QANTAS employees are, right now, feeling insecure - and this is being reflected in Virgin Blue's increasing market share.
An analogy I'd like to make, which I feel fits the current QF shake-up, is that as Dixon cuts up the QANTAS cake into smaller pieces, a few crumbs are lost each time - these crumbs end up on VB's plate.
Each smaller piece of cake now exposes more area (than the original whole) which is vulnerable to attack.
Flight crew and maintenance staff are easily identifiable, per aircraft, fixed costs, eg. 1xB737 = 2 pilots, 3 cabin crew, 1 LAME, minimum, thereby making easily identifiable "targets" in any cost-cutting. Other ground staff such as check-in, loaders, schedulers, etc, are able to be shared over several aircraft and are hence less easily cost definitive.
Even less so are non-revenue producing office staff, whose cost to the company can be written off across the entire fleet.
Anyway, one step at a time.
Where should Dixon's responsibilities primarily be channeled?
IMO, he is acting AGAINST QANTAS' best interests by screwing the staff - but with a million or two $$'s more under his belt from performance bonuses, will he really care by the time the sh!t hits the fan?
Interestingly enough, I had intended to raise this very issue when I next posted, by asking, "To whom should Mr Dixon weight his responsibilities - the QF employees, or the shareholders?"
So exactly who ARE the shareholders?
Can they be defined as one constant, defined group? Or are they an ever changing, indistinct, multiplex?
Do shareholders have any loyalty to a company? Or are they basically, purely reward/profit driven?
Are shareholders individually able to directly influence the base source of revenue for the company on a day to day basis?
Would a 100% turnover of shareholders in say a 12 month period, affect the earning potential for QF during that time?
Now ask the same questions, replacing "shareholders" with "employees".
Let's be quite honest - 1 or 2 p!ssed off Mum & Dad shareholders are not going to have ANY effect on a company the size of QANTAS - the same cannot be said of employees.
QANTAS employees are, right now, feeling insecure - and this is being reflected in Virgin Blue's increasing market share.
An analogy I'd like to make, which I feel fits the current QF shake-up, is that as Dixon cuts up the QANTAS cake into smaller pieces, a few crumbs are lost each time - these crumbs end up on VB's plate.
Each smaller piece of cake now exposes more area (than the original whole) which is vulnerable to attack.
Flight crew and maintenance staff are easily identifiable, per aircraft, fixed costs, eg. 1xB737 = 2 pilots, 3 cabin crew, 1 LAME, minimum, thereby making easily identifiable "targets" in any cost-cutting. Other ground staff such as check-in, loaders, schedulers, etc, are able to be shared over several aircraft and are hence less easily cost definitive.
Even less so are non-revenue producing office staff, whose cost to the company can be written off across the entire fleet.
Anyway, one step at a time.
Where should Dixon's responsibilities primarily be channeled?
IMO, he is acting AGAINST QANTAS' best interests by screwing the staff - but with a million or two $$'s more under his belt from performance bonuses, will he really care by the time the sh!t hits the fan?
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There is not one CEO of a major airline today that does not devote a moment of each day wondering what to do about the LCC amoebas springing up in their midst.
By announcing Quokka Airlines, QF has publicly admitted it is rattled and willing to accept the inevitable cannibalisation of the main brand as the quickest way to cut some cost out of the business.
IMHO, going for a separate LCC model is an admission that management, instead of being full of ideas, is actually out of ideas and basically lacks the intestinal fortitude to negotiate creative solutions to stretch the brand rather than cannibalise it.
As someone suggested, sophisticated yield management has been around for yonks and taking sandwiches out of the rear cabin is hardly rocket science. So what then is really driving this?
Quite simply, this is the quickest and easiest way to drive down unit labour costs. It is not the best way but simply the easiest.
History has shown that none of the so-called majors has been successful using the strategy being proposed. The jury may still be out on Delta's attempt but I don't rate their chances any better than some of the Europeans.
As for Quokka, it is the easy way to put some air in the PR tyres and make it look as though there is some creative thinking going on...no matter how destructive it may end up being to the brand in the longer term.
Most would accept that there will be continued downward pressure on working conditions across the industry for the foreseeable future. My question to the QF board is; why baste the whole turkey in such a distasteful sauce and make even more of the kitchen hands and patrons choose the chicken? Actually KapM's crumb analogy was pretty good.
VB must be quietly pleased with this development and will no doubt be doing some homework on what kind of business class seats to install on selected routes.
Perhaps it could be time to put my QF Frequent Flyer card next to my Ansett one....in my son's toy box.
By announcing Quokka Airlines, QF has publicly admitted it is rattled and willing to accept the inevitable cannibalisation of the main brand as the quickest way to cut some cost out of the business.
IMHO, going for a separate LCC model is an admission that management, instead of being full of ideas, is actually out of ideas and basically lacks the intestinal fortitude to negotiate creative solutions to stretch the brand rather than cannibalise it.
As someone suggested, sophisticated yield management has been around for yonks and taking sandwiches out of the rear cabin is hardly rocket science. So what then is really driving this?
Quite simply, this is the quickest and easiest way to drive down unit labour costs. It is not the best way but simply the easiest.
History has shown that none of the so-called majors has been successful using the strategy being proposed. The jury may still be out on Delta's attempt but I don't rate their chances any better than some of the Europeans.
As for Quokka, it is the easy way to put some air in the PR tyres and make it look as though there is some creative thinking going on...no matter how destructive it may end up being to the brand in the longer term.
Most would accept that there will be continued downward pressure on working conditions across the industry for the foreseeable future. My question to the QF board is; why baste the whole turkey in such a distasteful sauce and make even more of the kitchen hands and patrons choose the chicken? Actually KapM's crumb analogy was pretty good.
VB must be quietly pleased with this development and will no doubt be doing some homework on what kind of business class seats to install on selected routes.
Perhaps it could be time to put my QF Frequent Flyer card next to my Ansett one....in my son's toy box.
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Kaptin, I'm sure Geoff Dixon includes his staff in his decision making but when weighing his responsibilities they clearly have to be to the people who employ him. How can CEOs answer primarily to their employees? CEOs by definition must make decisions that will sometimes piss their employees off. That's their job.
I appreciate its a hypothetical but a 100% turnover of shareholders in 12 months would by definition damage QF immensely, if not terminally. If all of your shareholders sell their shares is this likely to increase the share price or decrease it? A large drop in the share price is going to threaten the company's existence more than staff turnover, particularly in such a capital intensive industry.
Lets look at QF's shareholders. A large majority of QF shares are held by fund managers and institutional investors. i.e. share market professionals. They do not measure a company's success by how happy the employees are. They are looking for hard financial data. If Geoff Dixon produces two plans - one for a radical restructure to reduce expenditure by $1 billion and the other a long term plan to reduce staff turnover (and not respond to a competitors attack on the QF cost base) - which one will they go for? Which one would they back to maintain or improve the share price?
Do you make investments to ensure the recipients of your capital are happy or do you set out to make a return? If its the former PM me and I can put you on to some great ventures
BTW - if you are judging companies by their staff morale maybe you wouldn't be ranking VB too far ahead of QF at the moment.
I appreciate its a hypothetical but a 100% turnover of shareholders in 12 months would by definition damage QF immensely, if not terminally. If all of your shareholders sell their shares is this likely to increase the share price or decrease it? A large drop in the share price is going to threaten the company's existence more than staff turnover, particularly in such a capital intensive industry.
Lets look at QF's shareholders. A large majority of QF shares are held by fund managers and institutional investors. i.e. share market professionals. They do not measure a company's success by how happy the employees are. They are looking for hard financial data. If Geoff Dixon produces two plans - one for a radical restructure to reduce expenditure by $1 billion and the other a long term plan to reduce staff turnover (and not respond to a competitors attack on the QF cost base) - which one will they go for? Which one would they back to maintain or improve the share price?
Do you make investments to ensure the recipients of your capital are happy or do you set out to make a return? If its the former PM me and I can put you on to some great ventures
BTW - if you are judging companies by their staff morale maybe you wouldn't be ranking VB too far ahead of QF at the moment.
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Although I agree a good CEO should be well remunerated, I don't know that I agree that the employee's can't be a top priority.
Anyone who has read "Peanuts" which is the story of Southwest in the US, will know that employee's are THE top priority of management, on the basis that happy and fulfilled employees will work harder and look after customers better and make decisions based on the best interests of the company. And Southwest is now the largest (in numbers of pax) airline in the world and also the most consistently profitable.
Maybe there is a lesson there.....
Anyone who has read "Peanuts" which is the story of Southwest in the US, will know that employee's are THE top priority of management, on the basis that happy and fulfilled employees will work harder and look after customers better and make decisions based on the best interests of the company. And Southwest is now the largest (in numbers of pax) airline in the world and also the most consistently profitable.
Maybe there is a lesson there.....
Jakethemuss - and if Q renegs on any agreement they have made?? Would mainline really strike over the issue? If not what else can mainline do - with Jetconnect, Impulse, Ex Ansett and God knows who else lining up for the seats?
It is just that you seem to be awfully confident an organisation that seems to be gearing up for a showdown with Unions generally (re: LAX) will honour whatever agreements they have made(they may well do of course, but these are still turbulent times for Aus/NZ aviation). Given the way the last Pilots'strike ended up, if push comes to shove would the crew be prepared to go out over this issue??
Wait and see I guess!
It is just that you seem to be awfully confident an organisation that seems to be gearing up for a showdown with Unions generally (re: LAX) will honour whatever agreements they have made(they may well do of course, but these are still turbulent times for Aus/NZ aviation). Given the way the last Pilots'strike ended up, if push comes to shove would the crew be prepared to go out over this issue??
Wait and see I guess!
If Dicko uses mainline crews for this operation he is a big teddy bear!
A seperate pilot group would offer many advantages and to suggest that the new airline is a low cost model, would surely demand this.
A ruthless CEO would make use of the following:
1- Pilot's paying for their endorsements as opposed to the double whammy of training a S/O onto the new type and training someone to replace the S/O.
2- A company tool to break industrial unrest at the extreme, or toward the other end, have ruthless EBA bargaining powers. Qantas likes this.
3- A contract having little semblance, in any shape or form, to present mainline perks- staff travel, bonuses, yearly service increments etc.
4- Possible cultural problems of cross polinisation of long haul crews into a budget domestic model.
5- Business models love the start afresh attitude. Catchcry stuff for those who have played boardroom bu$$sh$t bingo!
Good luck guys, but it doesn't make sense to use QF Mainline Crews.
No sooky pilot responses, just hard and cold facts as to why or what advantages there are to using QF crews. When the above seems cheaper.
A seperate pilot group would offer many advantages and to suggest that the new airline is a low cost model, would surely demand this.
A ruthless CEO would make use of the following:
1- Pilot's paying for their endorsements as opposed to the double whammy of training a S/O onto the new type and training someone to replace the S/O.
2- A company tool to break industrial unrest at the extreme, or toward the other end, have ruthless EBA bargaining powers. Qantas likes this.
3- A contract having little semblance, in any shape or form, to present mainline perks- staff travel, bonuses, yearly service increments etc.
4- Possible cultural problems of cross polinisation of long haul crews into a budget domestic model.
5- Business models love the start afresh attitude. Catchcry stuff for those who have played boardroom bu$$sh$t bingo!
Good luck guys, but it doesn't make sense to use QF Mainline Crews.
No sooky pilot responses, just hard and cold facts as to why or what advantages there are to using QF crews. When the above seems cheaper.
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Gnads,
Even being QF mainline, I don't know anything more than anybody else here. The Company have obviously thought a lot about it and AIPA may have added their two cents worth, but basically it's all very close to the chest.
But when you're talking about whether to use mainline pilots or not, have a look at what happened with Australian. Originally we were told that it would be all new aircraft, but instead they painted up exisiting airframes for the new venture. They also used mainline crews operating to the Australian contract. Why? Well to me it seems to be that if it all gets too hard (or unprofitable) they can just close up shop, respray the planes and tell the boys to wear their mainline uniforms to work tomorrow.
The new LCC thing could be started up the same way. It would make a lot of sense to use 737s, which are already operated by SH and then phase out the old 737-300s (probably to Jetconnect's trans-Tasman operation). By offering slightly reduced pay levels for captains and FOs, they would find plenty of takers to take these slots - resulting in the required labour cost savings. As unsavoury as this proposition is to many members of AIPA, this method of business at least ensured that Australian pilots were from the mainline. New hire cabin crew and ground staff working under much tighter contract conditions would be where the main savings would come from.
Their respective unions also wore this scenario for the formation of Australian airlines, since no existing mainline jobs were lost. It could work again in this instance.
Now I'm not saying that I particularly agree with any of this. But QF's problem, in my opinion, is that people expect to get the old QF service level (from ten years ago - booze, entertainment, movies, meals etc) for the Virgin Blue price. Attempts by QF to save money in product delivery and compete directly with VB are seen by the public as a deterioration in the QF product and provide any even bigger incentive to travel with VB. This has led, in my opinion, in QF seeing the need to form a new carrier that can compete head-on.
I hope that it will not be a disaster! I hope that it will make QF more profitable! I hope that it will be crewed by mainline pilots! But mostly, I hope it gives those smug little smarties in VB management a real kick up the butt!
Even being QF mainline, I don't know anything more than anybody else here. The Company have obviously thought a lot about it and AIPA may have added their two cents worth, but basically it's all very close to the chest.
But when you're talking about whether to use mainline pilots or not, have a look at what happened with Australian. Originally we were told that it would be all new aircraft, but instead they painted up exisiting airframes for the new venture. They also used mainline crews operating to the Australian contract. Why? Well to me it seems to be that if it all gets too hard (or unprofitable) they can just close up shop, respray the planes and tell the boys to wear their mainline uniforms to work tomorrow.
The new LCC thing could be started up the same way. It would make a lot of sense to use 737s, which are already operated by SH and then phase out the old 737-300s (probably to Jetconnect's trans-Tasman operation). By offering slightly reduced pay levels for captains and FOs, they would find plenty of takers to take these slots - resulting in the required labour cost savings. As unsavoury as this proposition is to many members of AIPA, this method of business at least ensured that Australian pilots were from the mainline. New hire cabin crew and ground staff working under much tighter contract conditions would be where the main savings would come from.
Their respective unions also wore this scenario for the formation of Australian airlines, since no existing mainline jobs were lost. It could work again in this instance.
Now I'm not saying that I particularly agree with any of this. But QF's problem, in my opinion, is that people expect to get the old QF service level (from ten years ago - booze, entertainment, movies, meals etc) for the Virgin Blue price. Attempts by QF to save money in product delivery and compete directly with VB are seen by the public as a deterioration in the QF product and provide any even bigger incentive to travel with VB. This has led, in my opinion, in QF seeing the need to form a new carrier that can compete head-on.
I hope that it will not be a disaster! I hope that it will make QF more profitable! I hope that it will be crewed by mainline pilots! But mostly, I hope it gives those smug little smarties in VB management a real kick up the butt!