Joyce left with the scraps as Dixon takes the loot
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Joyce left with the scraps as Dixon takes the loot
Joyce left with the scraps as Dixon takes the loot
Joyce left with the scraps as Dixon takes the loot
October 27, 2009
Geoff Dixon may well be Qantas's very own version of the Ghost of Christmas Past after Santa last week delivered the final instalment on his annual booty.
But for Alan Joyce, now exactly one year into the job as Dixon's replacement, the looming festive season is looking particularly challenging and the road ahead a difficult slog.
As Australian business ponders the dilemma of how best to cope with a recovering economy in a world generally mired in recession, Joyce appears to face all the hardships thrown up by the recovery with very few of the benefits.
While it remains one of the world's few profitable airlines, Qantas increasingly has become a captive to revenue constraints imposed upon it by an onslaught of increased competition on domestic and international markets.
And that has left Joyce with just one lever to pull to lift profitability - costs - as he ponders a way clear of the worst ever downturn in international aviation. Consider the revenue side for a second.
Qantas's version of its rivers of gold - the Sydney to Los Angeles route - has become a barren wasteland. The route that once delivered up to 20 per cent of the group's profit now is at best a break-even proposition since V Australia and Delta Airlines began services and more than halved economy prices just as the global recession killed high-end business travel.
The airline's European operations have been in decline for years, slashed by the arrival of cashed up Middle Eastern airlines, notably Emirates and Etihad. Now Qatar is close to launching services as well. Competition also looms on its lucrative South African run from V Australia, and its Asian holiday destinations are under attack from Virgin Blue.
On the domestic front, business travel has succumbed to the abstemious corporate climate just as the arrival of Tiger Airways - funded by Singapore Airlines' deep pockets - is creating havoc at the budget end with its recent launch onto the Sydney-Melbourne route and its Gold Coast services.
Tiger may only have six domestic aircraft right now but its body language suggests continued aggressive expansion.
Qantas clearly is better equipped to handle the Tiger Airways onslaught than Virgin Blue, but it too will suffer as capacity and competition increases and margins come under attack.
In the past year Qantas - like airlines globally - has slashed fares, delayed new purchases, reduced routes and retired ageing aircraft early. Still there are empty seats
and those that are full are yielding far less.
While running Qantas, Dixon had to deal with a series of catastrophic events such as SARS and the September 11 terrorist attacks. But these were jolts.
Joyce instead has been faced with a fundamental shift in the business requiring the sort of overhaul that is bound to inflame the volatile temper of a unionised workforce that already believes it has suffered death by a thousand cuts.
Within the next few years the Qantas logo will be seen ever more rarely in the skies as Jetstar essentially gobbles up its parent - a reverse takeover of sorts.
First though, expect Joyce to continue rationalising the backroom operations of Qantas and Jetstar.
Dixon set up the budget carrier as a mostly stand-alone operation operating in tandem with its established brand - with Airbus aircraft instead of Boeing and separate ground and baggage staff. However, essentially that merely was stage one in the ultimate goal of lowering costs across the group.
And while Dixon was more a marketer - it suited him to be seen to be expanding rather than simply hacking into existing conditions for Qantas workers - Joyce unfortunately does not have that luxury.
With revenue under attack on all sides, he is now under pressure to deliver on costs. The only way to do that would be to rationalise services, to eliminate duplication and to reduce Qantas working conditions into line with those of Jetstar.
Engineering, ground staff, baggage staff and anything that is not frontline service can be expected to come under the microscope in the near future. Pooled operations will be the norm.
If Joyce plans to fight back and regain market share on the European services it has relinquished in recent years - particularly to southern European destinations like Rome and Athens - it will most likely be with Jetstar, not Qantas.
During Dixon's tenure, Qantas ran a fairly sophisticated treasury operation that cleverly hedged currency and fuel price movements.
But as many big miners have discovered to their horror in recent years, hedging on multiple financial instruments can be either hugely profitable or deliver dire consequences. Big miners like BHP now prefer to be completely unhedged on mineral prices and currency and just take market conditions as they come.
Right now currency markets are inherently unstable as the US dollar continues what is looking like a long-term decline while oil prices are rising as the economy recovers and in response to the declining greenback.
Trying to successfully pick a path through that maze would require almost as much luck as expertise. In any case, Joyce's administration has shown less zeal in engaging in financial wizardry to deliver results and appears more intent on getting the airline into a position of strength.
Joyce left with the scraps as Dixon takes the loot
October 27, 2009
Geoff Dixon may well be Qantas's very own version of the Ghost of Christmas Past after Santa last week delivered the final instalment on his annual booty.
But for Alan Joyce, now exactly one year into the job as Dixon's replacement, the looming festive season is looking particularly challenging and the road ahead a difficult slog.
As Australian business ponders the dilemma of how best to cope with a recovering economy in a world generally mired in recession, Joyce appears to face all the hardships thrown up by the recovery with very few of the benefits.
While it remains one of the world's few profitable airlines, Qantas increasingly has become a captive to revenue constraints imposed upon it by an onslaught of increased competition on domestic and international markets.
And that has left Joyce with just one lever to pull to lift profitability - costs - as he ponders a way clear of the worst ever downturn in international aviation. Consider the revenue side for a second.
Qantas's version of its rivers of gold - the Sydney to Los Angeles route - has become a barren wasteland. The route that once delivered up to 20 per cent of the group's profit now is at best a break-even proposition since V Australia and Delta Airlines began services and more than halved economy prices just as the global recession killed high-end business travel.
The airline's European operations have been in decline for years, slashed by the arrival of cashed up Middle Eastern airlines, notably Emirates and Etihad. Now Qatar is close to launching services as well. Competition also looms on its lucrative South African run from V Australia, and its Asian holiday destinations are under attack from Virgin Blue.
On the domestic front, business travel has succumbed to the abstemious corporate climate just as the arrival of Tiger Airways - funded by Singapore Airlines' deep pockets - is creating havoc at the budget end with its recent launch onto the Sydney-Melbourne route and its Gold Coast services.
Tiger may only have six domestic aircraft right now but its body language suggests continued aggressive expansion.
Qantas clearly is better equipped to handle the Tiger Airways onslaught than Virgin Blue, but it too will suffer as capacity and competition increases and margins come under attack.
In the past year Qantas - like airlines globally - has slashed fares, delayed new purchases, reduced routes and retired ageing aircraft early. Still there are empty seats
and those that are full are yielding far less.
While running Qantas, Dixon had to deal with a series of catastrophic events such as SARS and the September 11 terrorist attacks. But these were jolts.
Joyce instead has been faced with a fundamental shift in the business requiring the sort of overhaul that is bound to inflame the volatile temper of a unionised workforce that already believes it has suffered death by a thousand cuts.
Within the next few years the Qantas logo will be seen ever more rarely in the skies as Jetstar essentially gobbles up its parent - a reverse takeover of sorts.
First though, expect Joyce to continue rationalising the backroom operations of Qantas and Jetstar.
Dixon set up the budget carrier as a mostly stand-alone operation operating in tandem with its established brand - with Airbus aircraft instead of Boeing and separate ground and baggage staff. However, essentially that merely was stage one in the ultimate goal of lowering costs across the group.
And while Dixon was more a marketer - it suited him to be seen to be expanding rather than simply hacking into existing conditions for Qantas workers - Joyce unfortunately does not have that luxury.
With revenue under attack on all sides, he is now under pressure to deliver on costs. The only way to do that would be to rationalise services, to eliminate duplication and to reduce Qantas working conditions into line with those of Jetstar.
Engineering, ground staff, baggage staff and anything that is not frontline service can be expected to come under the microscope in the near future. Pooled operations will be the norm.
If Joyce plans to fight back and regain market share on the European services it has relinquished in recent years - particularly to southern European destinations like Rome and Athens - it will most likely be with Jetstar, not Qantas.
During Dixon's tenure, Qantas ran a fairly sophisticated treasury operation that cleverly hedged currency and fuel price movements.
But as many big miners have discovered to their horror in recent years, hedging on multiple financial instruments can be either hugely profitable or deliver dire consequences. Big miners like BHP now prefer to be completely unhedged on mineral prices and currency and just take market conditions as they come.
Right now currency markets are inherently unstable as the US dollar continues what is looking like a long-term decline while oil prices are rising as the economy recovers and in response to the declining greenback.
Trying to successfully pick a path through that maze would require almost as much luck as expertise. In any case, Joyce's administration has shown less zeal in engaging in financial wizardry to deliver results and appears more intent on getting the airline into a position of strength.
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......too right.
The writing on the walls- has been in the form of graffiti scribbled on the back of most male toilet doors at QF......particularly on the jetbase.
Dixon and his marauders have left the sun bleached carcass of the Red Roo in the desert wasteland. They have driven off in their 4 wheel drive Lexus'.
The only way to to move the bones now is to reattach them to another host ( aka Jetstar) The once proud majestic Roo will be a battered ,bandaged, lean,disengaged trough feeder-dependent on the host for scraps.
Quick -time for my medication
The writing on the walls- has been in the form of graffiti scribbled on the back of most male toilet doors at QF......particularly on the jetbase.
Dixon and his marauders have left the sun bleached carcass of the Red Roo in the desert wasteland. They have driven off in their 4 wheel drive Lexus'.
The only way to to move the bones now is to reattach them to another host ( aka Jetstar) The once proud majestic Roo will be a battered ,bandaged, lean,disengaged trough feeder-dependent on the host for scraps.
Quick -time for my medication
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Banking parable
A BOSS at one of the big four banks has admitted its two-decade policy of shutting branches has cost it - and consumers - dearly.
In a classic mea culpa, Westpac group executive Peter Hanlon said removing customer-orientated bank managers and centralising operations was a massive mistake.
He said the banks had failed to care adequately for customers by morphing into an automated and faceless service that account holders were increasingly fed up with.
"Closing branches has been a complete failure. We have closed branches in places we simply should not have closed them. This is an admission we made a mistake," Mr Hanlon told The Daily Telegraph said.
In attempt to redress those mistakes, Westpac has revived a key role long thought extinct - the true bank manager focused on local customers and their communities.
Chasing the short-term dollar
Mr Hanlon told news.com.au that banks had "misunderstood" the balance between customers and shareholders over the past decade.
"Quite often we get caught up in world of short-term profits because of our half-yearly reporting cycle, without actually understanding that shareholders are interested in long-term returns," he said.
"I think what’s happened over a number of years we’ve been too short-term focused."
Mr Hanlon said the focus on "short-term cost-cutting" had led to a reduction of service.
"Banks have done a range of things in the name of profitability.
"No one can argue with that, because we have closed hundreds and hundreds of branches, and we have shrunk our workforce by tens of thousands, so it’s undeniable that we’ve reduced services," he said.
Australia "not cookie-cutter towns"
Mr Hanlon said Westpac had hired 400 new bank managers this year, telling them to be more hands-on, giving them more autonomy, and requiring them to be more active in their local communities.
"Over the last 20 years we've taken away the capabilities of bank managers to get involved in any lending decisions, we've taken away their ability to hire their own people, we've even taken away their ability to sponsor the local bowls club," Mr Hanlon said.
"The bank managers now decide who they hire, when they open and close, they decide where their sponsorship dollars go, they decide on what to do with specific customer inquiries.
"I want us to be respected again. I want bank managers to be respected members of the local community and I think the work people like me have done over the last 20 years, while not on purpose, has engineered the drop in respect of the local branch manager.
"Australia is not a country of cookie-cutter towns and cookie-cutter suburbs, so why continue to have a cookie-cutter approach to banking?"
The bank has also committed to opening at least 200 new branches in the coming years, many in locations where Westpac closed its doors barely 10 years ago.
Protecting customer details
Meanwhile, draft laws to prevent people's bank details from being sent overseas without their written permission were tabled in the Senate yesterday.
Family First Senator Steve Fielding said Australians did not want their personal information "booted offshore" when they talked to a bank employee in an overseas call centre.
-With The Daily Telegraph
In a classic mea culpa, Westpac group executive Peter Hanlon said removing customer-orientated bank managers and centralising operations was a massive mistake.
He said the banks had failed to care adequately for customers by morphing into an automated and faceless service that account holders were increasingly fed up with.
"Closing branches has been a complete failure. We have closed branches in places we simply should not have closed them. This is an admission we made a mistake," Mr Hanlon told The Daily Telegraph said.
In attempt to redress those mistakes, Westpac has revived a key role long thought extinct - the true bank manager focused on local customers and their communities.
Chasing the short-term dollar
Mr Hanlon told news.com.au that banks had "misunderstood" the balance between customers and shareholders over the past decade.
"Quite often we get caught up in world of short-term profits because of our half-yearly reporting cycle, without actually understanding that shareholders are interested in long-term returns," he said.
"I think what’s happened over a number of years we’ve been too short-term focused."
Mr Hanlon said the focus on "short-term cost-cutting" had led to a reduction of service.
"Banks have done a range of things in the name of profitability.
"No one can argue with that, because we have closed hundreds and hundreds of branches, and we have shrunk our workforce by tens of thousands, so it’s undeniable that we’ve reduced services," he said.
Australia "not cookie-cutter towns"
Mr Hanlon said Westpac had hired 400 new bank managers this year, telling them to be more hands-on, giving them more autonomy, and requiring them to be more active in their local communities.
"Over the last 20 years we've taken away the capabilities of bank managers to get involved in any lending decisions, we've taken away their ability to hire their own people, we've even taken away their ability to sponsor the local bowls club," Mr Hanlon said.
"The bank managers now decide who they hire, when they open and close, they decide where their sponsorship dollars go, they decide on what to do with specific customer inquiries.
"I want us to be respected again. I want bank managers to be respected members of the local community and I think the work people like me have done over the last 20 years, while not on purpose, has engineered the drop in respect of the local branch manager.
"Australia is not a country of cookie-cutter towns and cookie-cutter suburbs, so why continue to have a cookie-cutter approach to banking?"
The bank has also committed to opening at least 200 new branches in the coming years, many in locations where Westpac closed its doors barely 10 years ago.
Protecting customer details
Meanwhile, draft laws to prevent people's bank details from being sent overseas without their written permission were tabled in the Senate yesterday.
Family First Senator Steve Fielding said Australians did not want their personal information "booted offshore" when they talked to a bank employee in an overseas call centre.
-With The Daily Telegraph
