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Qantas must break unions: Ryanair co-founder

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Old 18th Jan 2007, 15:06
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Qantas must break unions: Ryanair co-founder

One wonders if this this the shape of things to come.

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EMMA ALBERICI: Airline Partners Australia, the group looking to privatise Qantas, will submit its bidders statement to the corporate regulator within a fortnight.

That document will outline exactly what APA has in mind for the country's national carrier and will in part answer the question of why they're willing to pay $11 billion for a company that the stockmarket valued at just $6 billion before the bid surfaced.

Among the group of intending buyers is the Texas Pacific Group which 12 years ago became an investor in Ireland's low cost airline Ryanair.

Since Texas Pacific invested in Ryanair, the airline's grown from eight to 108 jets - it now has the largest flight network across Europe and a stock market value greater than British Airways.

One of the co-founders of Ryanair, Kell Ryan, will address a business conference later this month in Queensland.

Mr Ryan believes the key to future success for Qantas is in breaking the unions. I spoke with him earlier.

KELL RYAN: Ryanair is a non-unionised company. The staff are all in profit sharing, but I mean you have to get your workforce together.

I think… I don't know what the issues are there. British Airways are going on strike - their cabin staff, 98 per cent of them have taken it on board to have cabin staff go on to sick days that they think they're entitled to.

You know, they just need to wake up. The world is changing. All they're going to do is damage their company.

EMMA ALBERICI: So unionised workforces in the airline industry are a thing of the past in your opinion?

KELL RYAN: If you look at the examples, particularly in the States and then maybe even in Europe as well. If you look at Air Italia, constant problems with their unions. They won't accept change and they're now going to be sold off.

Same thing happened with Sabina. It's happened with British Airways, it's happened with American Air in the States, it's happened with United. And one of these airlines will go out of business.

Unions have to realise that companies have to be flexible, that there is competition and they have to… they have to be able to adapt to a changing world.

EMMA ALBERICI: Is there a future with the style of airline that Qantas and British Airways have traditionally run?

KELL RYAN: I don't think so. Personally, because change is happening all around them, you know, we've had the events of 9/11 and we've had SARS and we've had fuel increases and stuff like that, so you have to be able to keep a handle, I think, on your costs. You have this threat from other low-cost carriers are eating into your market so you have to have a flexible work force, I believe, and you have to have people that can adapt to change.

We have the lowest cost base of any airline on the planet. We have the most flexible, dedicated workforce and we are profitable, and we've kept it simple.

People have been denied low cost travel, particularly in Europe, for decades. They've been ripped off by high-fare legacy carriers and now they've found a new way to fly and next year, as I said, Ryanair will carry 42 million passengers. And in five years time it'll carry 70 million, making it the largest airline in the world and that's purely on low cost.

It's not even a question of even getting rid of people. It's making people be more productive.

EMMA ALBERICI: How do you do that?

KELL RYAN: I think you've got to talk to them, you've got to explain it.

EMMA ALBERICI: Inevitably it's paying them less, is it not?

KELL RYAN: Well, you can… no, you don't have to pay them less. All you can say is that they can't be expecting like in the case of United… US Airways in the States who wanted a 68… the company was trying to give them… to accept a three per cent wage cut, which would be paid back when the company got profitable. And they were looking for a 68 per cent pay rise.

What you try to get is people to be a bit more flexible and a bit more productive, and not to have these practices that they've had in place for 20 or 30 years.

And if you look at it, it's the same here in England, the car industry went out of business because unions wouldn't adapt and it's the same with the airlines.

EMMA ALBERICI: Co-founder of Ryanair, Kell Ryan.


Fancy a pay cut anyone?
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Old 18th Jan 2007, 17:41
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Of course it is!

That is all they have in the bag. There is no magical 20% IRR, the only way is to cut terms and conditions. "workchoices" gives tools like these the ability to do it, that is for any union silly enough to sign off on an EBA.

The funny thing with Ryan Air is that the now don't charge for endorsements. They pay quite well. They couldn't get sufficient pilots. It is called supply and demand.

If they try to break unions at Q, they may in fact haemorrage cash. Taking the unions on may make this whole thing untenable

As to the quip about BA cabin crew, read theforums. The "sickness" policy has them in a monitored disciplinary procedure with three illnesses in twelve months. That is one of the reasons there will be a strike, but never let truth get in the way of good spin!
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Old 18th Jan 2007, 19:32
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Very simplistic view of the world. The reasons these great airlines went backwards - the unions of course.

What about these reasons:

- poor management
- poor communication by management with its employees. Kell Ryan says "just talk to them".
- outside factors like SARS, World Trade Centre (I refuse to say 9/11, which in Oz is the 9th of November), fuel costs.
- lack of government incentives or support for vulnerable national industries

Care to add any more.

Ansett didn't go bust because of unions.
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Old 18th Jan 2007, 21:11
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Yep... It could never be management's fault that a company goes bust !

Anyway, they certainly never take the blame... Somehow they even walk away with a golden handshake !!! Don't worry about the pleb employees who lose everything !

And the big picture... Lets see ; you and I, the general unwashed masses, get to have "choice" and travel on LCCs and get paid ever diminishing salaries so that the select few, corporate leaders, pollies, media types, etc, etc, get to enjoy what the rest of us work so hard for ! Yep, sounds fair to me... Where do I sign ?

Bring on the revolution !!!
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Old 18th Jan 2007, 21:49
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Originally Posted by assasin8
Bring on the revolution !!!
Hear, hear......

No mention anywhere about QF's projected record profit which looks like coming in around 1.1 BILLION AUD of which of Qantas's heavily unionised workforce had NO part in achieving.

Asshole.....
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Old 18th Jan 2007, 22:01
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EMMA ALBERICI: Is there a future with the style of airline that Qantas and British Airways have traditionally run?
KELL RYAN: I don't think so. Personally, because change is happening all around them, you know, we've had the events of 9/11 and we've had SARS and we've had fuel increases and stuff like that, so you have to be able to keep a handle, I think, on your costs. You have this threat from other low-cost carriers are eating into your market so you have to have a flexible work force, I believe, and you have to have people that can adapt to change.
We have the lowest cost base of any airline on the planet. We have the most flexible, dedicated workforce and we are profitable, and we've kept it simple.


That's strange!!

I thought I read somewhere(AFR) this week that QF has revised it's forecast profit by an extra 25%-30%.

But of course there is no place for Full Service airlines anymore.

Yeah right.

Spin Drs at their best
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Old 18th Jan 2007, 22:08
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Ho ho ho! Hee hee hee! Ha ha ha! With the greatest of respect I suggest some of you might like to look at the various Pprune threads on Ryanair and the way they treat their staff!

If QF is remade in the Ryanair style, you simply won't know what hit you and they will make a 20% return on investment. Jetstar sounds like paradise compared to Ryanair.
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Old 18th Jan 2007, 22:15
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Southwest airlines

It's interesting that the mother of all LCC's, Southwest is unionised.
I suggest people get themselves a copy of Nuts, or just read the reviews to see why the "bash your people" strategy will fail.
Southwest has been profitable every year since 1973, never furloughed an employee. $1000 dollars invested in 1973 was worth $1,500,000 by 1996. Many of its staff had become millionaires through profitshare. Its secret, choose the right people and treat them like a family, there is trust between employees and management.
Southwest has spawned many imitators. They clone the "mechanics" of the business, but rarely the people culture. Words such as fun, family, respect, dignity & job security keep coming up again and again. Do you hear these at QF? Just the opposite. Deliberately destroying careers & people to gain short term profitablity. You may gain their bodies, but you have lost their heart & soul. Those that remain are lost forever, bitter & twisted.
ENGAGE EMPLOYEE HEARTS AND MINDS
Ownership isn't just about equity, its about bringing something to the table -ideas, skills, and talents that others value & appreciate. When people feel involved, they care more. The more they care, the more willing they are to assume ownership. Jack Welch, GE's chairman and Chief Executive Officer, believes that engaging peoples hearts and minds is the key to everything" " I think any company thats trying to play in the 1990s has got to find a way to engage the mind of every single employee. If you're not thinking all the time about making every person more valuable you don't have a chance. Whats the alternative? Wasted minds? Uninvolved peop;e? A labour force thats angry or bored? That doesn't make sense!"
Nuts pages 103-104

"Pilot engagement has no dollar value"
Senior QF Manager
Southwest is its people. QF is its shareholders.
Southwest is profitable because it is people are engaged & clever. QF is profitable because of government policy.
Reading this book is a shocking, Southwest only has 4 layers in the company. The enemy is bureaucracy and empire building. It gives them the flexability & agillity to make crucial decisions within minutes or hours, not months or years. Everything they do is 180 degrees from what can be seen at QF. Reading the book I am scared, its just as well the Roo has been a protected species in the past. Breaking the unions will not save the company, managements is fundementally & fatally flawed. The distrust between the owners and the employees can only increase by "breaking the union" strategy.
The "legacy" IR strategies evident at QF are doomed to fail. Now the wheel has turned with the pilot shortage (~250,000 new pilots required over the next 20 years just to cover the fleet growth based on BOEING's own numbers, let alone retirements). However we as pilots must play our part. Employers & employees will have to work together, but in a organisation where there is trust and respect both way. I cannot see this happening anytime soon with the current "annointed" management team at QF. Of the senior executives, I get feeling that only one is a "people person".
The pilots an not totally blameless here, however the years of legacy management has ensured a culture that is so poisonous, that it may take more than a decade to repair, if things were to change right now.
There is however a yawing gap in the market for a very profitable alternative where a company gets it people culture right.

Don't take my word for it, read these books and think about yourself. Do yourself a big favour, at US$20 each (including postage), air freighted world-wide (no money in freight) within four or five days they will help you understand this insane industry.
How to do it right with:
Nuts - Southwest Airlines crazy recipe for business and personal success

How not to do it:
Hard Landing - The Epic Contest for Power and Profits That Plunged the Airlines into Chaos
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Old 18th Jan 2007, 22:17
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What I find interesting is that we are being continually bombarded by interviews with the corporate types telling us how greedy we are and that the fault with everything is done to us.

As has been mentioned Qantas looks as though it will make a NEW record profit well over a $1 billion. This of course according to people like Kell Ryan has nothing to do with it's employees.

When asked if you have to offer employees lower money he waivers for a second and then say's ": Well, you can… no, you don't have to pay them less. "

But in the same interview tell us that Ryanair has the lowest cost base...WTF

How do you get that if you don't lower pay and conditions?

So the employee gets less,the pax invariably gets less service and the only one who makes more is ....drum roll please...yes thats right the bosses.They should change the name from LCC to High Paid Bosses Airline or HPBA or GIGA....Greed Is Good Airline

I think it is time for the unions to make public the pay and pay rises afforded to Qantas bosses especially compared to other airlines with larger fleets.I cannot understand why our unions are not doing any PR.The letter by the QF F/O to the AFR was fantastic.

We have to fight fire with fire

Sunfish ....Are you still peeved about Ansett going the way of the Dinosaurs..and I forgot your brilliant SIA wants to relocate their staff in Australia,NZ the US and Canada to India.Yep they are really interested in others
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Old 18th Jan 2007, 23:16
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You have these Kell Ryan knobs saying things like: it's not about pay cuts, it's about rejecting 68% payrise demands and offering only 3%, etc, etc.

Well, Kell, QF is offering NOTHING. A 3 year pay FREEZE, mate. Despite a projected billion dollar profit, they can't afford to give a CPI increase to their employees that are MORE productive than their DJ counterparts? What crap. Two sides to every story, mate.

And Sunfish, you are a sad, sad case, pal. I used to read your posts with interest because they were (once) the most intelligent, insightful posts. Now you are revealed for what you really are - a nasty piece of work that would be gleeful if 30000 Australians lost their jobs. Not defending each and every one of those 30000, but the vast majority do an honest day's work. And we have spiteful, nasty blokes like you around who would be joyous if they end up on the scrap heap? What are you on, mate?
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Old 18th Jan 2007, 23:31
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That story is heartening! What can I look forward to in the future, old Aeroflot style service and maintenence done in Kazachstan. Don't you love being called greedy by someone who makes a truckload more than you do. Workchoices = be happy you've got a job and don't complain when we sack you for our mistakes.
If qantas decided to take on the unions in the current industrial relations climate it won't be like 89. There is a lot more support out there for people being shafted, it would be devastating. When a company is in trouble don't start at the bottom look at the top first. I am getting well fed up with people telling me the bucket is only so deep while they sip Moet in the Maldives.
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Old 19th Jan 2007, 00:01
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I think we are all missing an important point. Sure, Ryan is full of BS. But as every pilot that can tell a good 'war story' should know, a believable story has just enough truth in it to make the BS sound reasonable.

Where is the truth in what Ryan said? The world is changing. Damn right.
And the industry cannot look back at the '60s to '80s and say - thats how to do it. Because those days are gone.

However, to have pilots that can fly aeroplanes, controllers that can sequence, engineers that can fix, you need trained, experienced people.
There are other industries that compete for talent. If aviation looks like a dinosaur industry with shrinking benefits the young kids entering will dwindle away. So there will be demand for our skills.

What WE have to wise up to, is the new way of doing business, and shape it. We need to wise up to the fact that airline companies or groups do not stay in business for decades anymore. We need career structures that are not dependent on one company that wont stay in business.

Just to throw ideas around -- what if the union was an employer, a big labour hire company like PARC etc but had pilots on permanent hire. Salary, superannuation, travel, insurance, etc. Then they hired you on short or long term assignment to airlines. Just an idea off the top of my head.

Ryan is right in many ways. The world has changed. Time we changed our structures and tactics and used our in-demand skills as leverage to 'ride the wave' rather than be Canute ordering the tide to abate.

We are supposed to be really smart people, hey we can fly aeroplanes -- why not be clever industrially and career wise as well and re-write the book to suit us? It doesn't even have to be adversarial, why not lead the companies in a new direction?
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Old 19th Jan 2007, 02:02
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However, to have pilots that can fly aeroplanes, controllers that can sequence, engineers that can fix, you need trained, experienced people.
There are other industries that compete for talent. If aviation looks like a dinosaur industry with shrinking benefits the young kids entering will dwindle away. So there will be demand for our skills.
Damn right!

I have a 15 year old son about to enter year 11 and making choices about his future career now. He's a bright, amiable young man who would do well in most fields in aviation. What careers are he and his friends looking at;

- merchent banking,
- stockbroking,
- law,
- a trade.

Aviation isn't high on the list if at all.
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Old 19th Jan 2007, 02:17
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**Rant Alert**

I am getting so sick of hearing this cr@p from airline management!

There are 3 groups of people whom without you have no airline to manage;

Pilots

Flight Attendants

Engineers

If the management don't show up for a week (Xmas every year), does the whole show grind to a halt? No!

If the pilots, flighties and gingerbeers don't show for a day......

I hope to live to see the day when an airline management team realise this and treat the above with the respect they deserve.

For if they all walk, then the management are out on their shiney arses as well.

For too long we have had to put up with the management attitude of;

"You are lucky that we run this airline so that you have job"

Faaark off!

I think that the reverse would be more appropriate! No pilots, no airline to run

Con

**Rant over**
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Old 19th Jan 2007, 02:21
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Dont hold back Con..well done mate..I farken agree...some could argue that when the managers do fark off, the place runs better anyway.
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Old 19th Jan 2007, 02:39
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Neatly conflating two issues here.

First of all Ron & Edna, its you who are the sad case because it has been proven over and over again that protecting QF's 30,000 jobs is costing many more than 30,000 jobs elsewhere in the economy - so your argument is the usual special pleading of a rent seeking group, as economists would call it.

It is simply not in the national interest to protect QF from competition because it has been shown time and again that the only way you can get efficiencies and change in business cultures is via the blowtorch of competition.

Let me give you an example. Before the Button plan to remove protection from the car industry was begun, Australian cars that were produced were overpriced bits of ****e that cost twice or more as much as their overseas counterparts. They were technically backward, they were low quality, they performed badly, they were produced in antique factories in the most innefficient way possible.

Why? Because management had absolutely no incentive to improve whatsoever because they were protected by 100 percent tariff barriers, so they could be as slack as they like, as could their workers, with no penalty.

The penalty of course was paid by the Australian consumer, who paid double the money for half the car compared to overseas consumers. And when you multiply that type of protection by a lot of industries, you get a crap economy with zero competitiveness and poor jobs growth (the economy must grow on average about 3.5% a year to provide for natural increase in labor.)

However, we grew up and took the decision to dismantle industry protection - with one important exception - you guessed it - international air travel. And since both Labor and Liberal power bases are in Sydney, and Qantas is a totally Sydney-centric airline, Qantas remained protected.

The net result of that decision is that Qantas can produce an overpriced, substandard, unreliable international air service, biased in favor of Sydney against other state capitals and still produce a billion dollar profit.

The reality is that that profit is paid for by every Australian, not only the ones that have to fly in your aircraft and experience your disgusting service, but every Australian who is denied a pay rise, or a job opportunity, because the economy cannot grow as fast as it should with Qantas's hands around its throat, strangling growth in International trade and tourism.

I guess I personally should be hoping that your airline continues to be cossetted by your Sydney mates. That way, when the end to your protection finally comes, as it will one day, you will experience total collapse because you have failed to adapt like the dinosaur did. And when it finally happens every State Premier except the Premier of New South Wales will cheer!

And its BS to say that 30,000 aviation jobs would disappear if QF folded. Nature abhors a vacuum and other aviation jobs would appear for those whose skills were actually worth something.
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Old 19th Jan 2007, 02:51
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And a final P.S. Ron and Eddy, exactly why do you think Qantas is a target for a takeover?

1. Is it because it is a lean and mean, well managed company, staffed by highly motivated people whose energy and competitive spirits will stop at nothing to achieve customer satisfaction?

2. Is it because Qantas staff and management are an indivisable team, finely honed to be the best airline staff in the world, in the furnaces of international competiton?

3. Is it because no other airline in the world can match its cost structure that provides its shareholders with above average returns while its customers receive higher than average value for money as measured by customer satisfaction surveys?

4. Is it because Australians will fight to get a seat on a Qantas aircraft in preference to any other airline in the world?

Come on, I'm all ears to hear your answer.

Mine is that it is a fat, dumb, and happy because it effectively is a monopoly, and new investors are going to rip the costs out of it while still trying to retain the monopoly. It is in that knowledge that the Government needs to decide its actions.
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Old 19th Jan 2007, 03:23
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The bitterest pill to swallow

Sunfish

As we know quite well and answered by QFinsider, the Australian public gave the industrial ability for this slash and burn to happen by voting for them. I have no sympathy for coalition voters who will see their and their childrens ability to have a decent lifestyle as i can move quite easily back to Europe and bring my skills elswhere. At the next federal election i know what i will vote for. Right now the timing may not suit the coalition going into an election year but this is where, perhaps, we can be at an advantage.
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Old 19th Jan 2007, 03:41
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Um, sorry, but The Fish has responded very well.

Well written, very clear, particularly the PS
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Old 19th Jan 2007, 03:55
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4PW

Our fate in being able to have a decent living is being played out right now and here we go again with the VIC vs NSW which will ultimately and very quickly close this thread. Get it?
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