Virgin Blue now has 30% (Geoff Dixon)
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Virgin Blue now has 30% (Geoff Dixon)
Dow Jones
Dixon said while he couldn't rule out redundancies if any war with Iraq is prolonged, the outlook beyond this potential conflict is solid for Australia's national carrier.
"We will be in a very very strong position after the war is concluded," Dixon said.
He also said the company will reassess its strategic alliance with regional rival Air New Zealand Ltd. if the proposal is too heavily compromised by the demands of regulators, governments and industry groups.
"We have no plans at this stage to change any of our offer on our proposal with Air NZ," he said.
"If the ask is too much the deal won't be done."
Dixon also said Virgin Blue, the no-frills domestic rival to Qantas, has about 30% of the market. This is above the 25% estimated by Virgin Blue and industry analysts.
"They will get a third but I don't think they will get too much more," he said.
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Dixon said while he couldn't rule out redundancies if any war with Iraq is prolonged, the outlook beyond this potential conflict is solid for Australia's national carrier.
"We will be in a very very strong position after the war is concluded," Dixon said.
He also said the company will reassess its strategic alliance with regional rival Air New Zealand Ltd. if the proposal is too heavily compromised by the demands of regulators, governments and industry groups.
"We have no plans at this stage to change any of our offer on our proposal with Air NZ," he said.
"If the ask is too much the deal won't be done."
Dixon also said Virgin Blue, the no-frills domestic rival to Qantas, has about 30% of the market. This is above the 25% estimated by Virgin Blue and industry analysts.
"They will get a third but I don't think they will get too much more," he said.
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Ohhh Geoff, you poor little man. Virgin won't get more than 30%?
Of course you'll do your best to stop open skies talks with SQ won't you?
Well, according the the Straights Times in Singapore, Anderson has already given the green light to imminent talks with Singapore government, regarding open skies.
No, your right, Virgin won't get more than 30% of the market. But a Virgin with an SQ equity and with Alliance and REX as feeders will end up with substantially more than 30%
Keep stressing Geoff, the wind has already been put up you with SQ increasing capacity between Australia and Singapore by 17% and with AirNZ pulling out of Singapore, they have the open slather there now. Those subtle and not so subtle schedule changes by SQ must be really perplexing you as well?
Geoff, your favours of the federal government have worn thin. Me thinks you won't be able to stop the open skies agreement because your argument of Australia not needing competition doesn't wash anymore. You'll find after STAR's meeting last week, that SQ will be the dominant STAR carrier in the region and whether you like it or not, there is not a damn thing you can do about it. But look Geoff, you still harbour that fantasy of SQ wanting an equity stake in QF. it makes for amusing reading in Singapore, thats for sure.
Of course you'll do your best to stop open skies talks with SQ won't you?
Well, according the the Straights Times in Singapore, Anderson has already given the green light to imminent talks with Singapore government, regarding open skies.
No, your right, Virgin won't get more than 30% of the market. But a Virgin with an SQ equity and with Alliance and REX as feeders will end up with substantially more than 30%
Keep stressing Geoff, the wind has already been put up you with SQ increasing capacity between Australia and Singapore by 17% and with AirNZ pulling out of Singapore, they have the open slather there now. Those subtle and not so subtle schedule changes by SQ must be really perplexing you as well?
Geoff, your favours of the federal government have worn thin. Me thinks you won't be able to stop the open skies agreement because your argument of Australia not needing competition doesn't wash anymore. You'll find after STAR's meeting last week, that SQ will be the dominant STAR carrier in the region and whether you like it or not, there is not a damn thing you can do about it. But look Geoff, you still harbour that fantasy of SQ wanting an equity stake in QF. it makes for amusing reading in Singapore, thats for sure.
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Bloody hell.
You do have a personal grudge with anything remotely connected with Qantas. Take a few deep breaths and chill out. This is bordering on psychotic behaviour.
Give Geoff a call or email him. I wouldn't think he would read PPRUNE.
You do have a personal grudge with anything remotely connected with Qantas. Take a few deep breaths and chill out. This is bordering on psychotic behaviour.
Give Geoff a call or email him. I wouldn't think he would read PPRUNE.
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ohh thumpa, you really shouldn't take my postings to heart. What do you say of all the anti Virgin people posting stuff? would you say that they have a grudge against Virgin?
It's all very well to sledge Virgin, but you QF group employees hate it when you get it returned don't you?
Go learn your engine failure drills thumpa. You may need them soon. Oh and by the way CVR's do tell an interesting story as to an airlines experience, training and procedures.
I'm going fishing soon, I hope the fish bite as well as you do.
It's all very well to sledge Virgin, but you QF group employees hate it when you get it returned don't you?
Go learn your engine failure drills thumpa. You may need them soon. Oh and by the way CVR's do tell an interesting story as to an airlines experience, training and procedures.
I'm going fishing soon, I hope the fish bite as well as you do.
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Well, I love a good stir qfpaypacket, so cop this one. Keep your arrogance going my friend, your airline could potentially fall from grace if the open skies agreement with Singapore works out. Lovely to see in most of the papers over the weekend a "defiant" Geoff Dixon pleading with the government to not let an open skies agreement happen.
It would be a very gutsy government to impede a large International carrier who's service,aircraft and standards are better than QF's opening up more opportunities in Australia. Especially great opportunities like allowing Virgin to expand, REX and Alliance to feed a cashed up airline that not only has a discount side in VB, but a two class side using Silkair A320's,A321's.
An airline where Corrigan has his underbelly cargo complement fullfilled in the Airbus aircraft, and the VB 737's used to go where the 717's and 146 operate.
Boy, think of the jobs and the opportunities there, not to mention the whinging and whining that would now be coming from Dixon!!! Gee whiz, he's be on the phone to Howard straight away!!
Throw all that in plus Virgin Atlantic,SQ, Asiana, Thai, UAL, Lauda utilising the plan they devised last week at the STAR meeting to compete with QF out of Australia. Wow, what a great opportunity for travellers and job hunters, no longer confined with having to fly with the monopolistic, arrogant lame arse service carrier in the region.
Yeah, Geoff has a good idea alright, why you think he's amassing what little government support he has to fend off this inevitable competition.
If you think is pie in the sky, just wait and see what happens in the next 18 months!!!
It would be a very gutsy government to impede a large International carrier who's service,aircraft and standards are better than QF's opening up more opportunities in Australia. Especially great opportunities like allowing Virgin to expand, REX and Alliance to feed a cashed up airline that not only has a discount side in VB, but a two class side using Silkair A320's,A321's.
An airline where Corrigan has his underbelly cargo complement fullfilled in the Airbus aircraft, and the VB 737's used to go where the 717's and 146 operate.
Boy, think of the jobs and the opportunities there, not to mention the whinging and whining that would now be coming from Dixon!!! Gee whiz, he's be on the phone to Howard straight away!!
Throw all that in plus Virgin Atlantic,SQ, Asiana, Thai, UAL, Lauda utilising the plan they devised last week at the STAR meeting to compete with QF out of Australia. Wow, what a great opportunity for travellers and job hunters, no longer confined with having to fly with the monopolistic, arrogant lame arse service carrier in the region.
Yeah, Geoff has a good idea alright, why you think he's amassing what little government support he has to fend off this inevitable competition.
If you think is pie in the sky, just wait and see what happens in the next 18 months!!!
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On a serious note:
I remember Geoff saying at last years press conference that Virgin had 10% of the market.
A 20 % increase in market share in twelve months in any industry by a start up company, is a fine acheivment.
Does anyone know if the market size has increased in the last twelve months? I expect it has, as both companies are not marketing to the same clientelle.
If this is so, it makes the acheivment all the more incredible as they would have in excess of 30% based on last years market.
Take a walk through both terminals and you'll see many full planes arriving and departing.
Cheers HH
I remember Geoff saying at last years press conference that Virgin had 10% of the market.
A 20 % increase in market share in twelve months in any industry by a start up company, is a fine acheivment.
Does anyone know if the market size has increased in the last twelve months? I expect it has, as both companies are not marketing to the same clientelle.
If this is so, it makes the acheivment all the more incredible as they would have in excess of 30% based on last years market.
Take a walk through both terminals and you'll see many full planes arriving and departing.
Cheers HH
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Ohh thumpa, whats negative about it? I'm being very positive and optimistic about the future for aviation in Australia. With Virgin having 50 odd planes, great regional carriers like Alliance and REX expanding. Fantastic opportunities from STAR connections. Why would you want to go and work for QF? too old anyway.
We may end up going back to a two airline system here. With one carrier having a really high cost base and the other not, mmm who would that be?
What are the first things to go when competition kicks in and profits drop? wetleased aeroplanes and contract crews.
I'd be more worried about your own backyard thumpa, have you thought about applying for Virgin?
We may end up going back to a two airline system here. With one carrier having a really high cost base and the other not, mmm who would that be?
What are the first things to go when competition kicks in and profits drop? wetleased aeroplanes and contract crews.
I'd be more worried about your own backyard thumpa, have you thought about applying for Virgin?
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Franky
My backyard is fine. The flowers are starting to bloom, the lawn will need mowing soon. However I don't quite get the connection between my backyard and Virgin Blue. You aren't from the Middle Earth?
My backyard is fine. The flowers are starting to bloom, the lawn will need mowing soon. However I don't quite get the connection between my backyard and Virgin Blue. You aren't from the Middle Earth?
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Frank,
Whilst you may have read a few articles here and there in the sydney morning herald and perhaps even (gasp) flight international, you do not have a good grasp of what is going on in the aviation market.
It is not all about low cost structures and paying your people as little as possible. Qantas has insurmountable advantages in both size and scale that no policy changes can rectify. Just leave running Qantas to people who do have an idea of what's going on. No one in Qantas asked for your opinion. No one outside Qantas should really care about your opinion. And most importantly you do not know enough about the inner workings of airline management at Qantas to be able to give a valid opinion.
Qantas is easily the best aviation job in Australia. I think you should just try and earn as much money as you possibly can in some other airline. It sounds like that would make you happy.
Whilst you may have read a few articles here and there in the sydney morning herald and perhaps even (gasp) flight international, you do not have a good grasp of what is going on in the aviation market.
It is not all about low cost structures and paying your people as little as possible. Qantas has insurmountable advantages in both size and scale that no policy changes can rectify. Just leave running Qantas to people who do have an idea of what's going on. No one in Qantas asked for your opinion. No one outside Qantas should really care about your opinion. And most importantly you do not know enough about the inner workings of airline management at Qantas to be able to give a valid opinion.
Qantas is easily the best aviation job in Australia. I think you should just try and earn as much money as you possibly can in some other airline. It sounds like that would make you happy.
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qfpaypacket
Whilst what Franky writes we may may not always agree with. In fact I never do. However it is always good to have a laugh at what people have to say and we must always encourage people from all corners of aviation to contribute in order to view other sides of the coin. Even those who inhabit Tasmania. After all it is a bulletin board.
Whilst Qantas is finacially the best job to have. A job with Virgin certainly would be as rewarding and challenging once one got to the right hand seat. At the end of the day you take what you can get.
By the way from a previous reply Franky. I believe there are no recall items for engine failure in a 71.
Tootaroo
Whilst what Franky writes we may may not always agree with. In fact I never do. However it is always good to have a laugh at what people have to say and we must always encourage people from all corners of aviation to contribute in order to view other sides of the coin. Even those who inhabit Tasmania. After all it is a bulletin board.
Whilst Qantas is finacially the best job to have. A job with Virgin certainly would be as rewarding and challenging once one got to the right hand seat. At the end of the day you take what you can get.
By the way from a previous reply Franky. I believe there are no recall items for engine failure in a 71.
Tootaroo
Last edited by thumpa; 23rd Feb 2003 at 08:54.
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Well, whatever happens happens. Least I've sparked a bit of debate on the issue, albeit not debate, but an attack on what I say.
The real guts of the issue is while everybody is happy to knock VB, and yes, it's usually you arrogant QF staff that are the ones that scoff and carry on about them, it aint the general public. You increasingly find it hard to accept criticism about your own airline. So as far as I'm concerned, your hypocritical. And qfpaypacket, I havent yet read or heard anything that is contradictory to what I have read and heard previously about the likes of Geoff Dixon and co, so until I do, and I know a fair amount would join me in getting sick of the arrogance of the man on TV, then that's the stance.
Your remark about Tasmania thumpa are very curious, then again, one would expect that from an arrogance inherited from being in a company that is there but for the grace of god, and whom most of the decent guys have left and one in which is renowned for it's appalling employee treatment and probably, well, knowingly, standards. So while you sit there with your rose coloured glasses and tout your position, remember, as someone quoted recently, it could come to an end very abruptly, look at whats happened in Aviation in the last 18 months.
All it would take is for the proposed equity stake to occur in VB, and the associated alliances that would follow, and the arrogant, conceited smile that adorns the likes of qfpaypacket and thunpa will change as the threat of uncertainty rears it's ugly head.
I feel that the devil that QF knew, that being AN, was the devil they knew!!. And now with the uncertainty of the next likely competitor and JP Morgan putting a high probability on that being SQ, if you still believe your untouchable, your either very naive or very stupid.
So it's with that, bring on a VB and SQ alliance!!! there are two great regionals waiting in the wings to feed the alliance. Go REX and go Alliance.
The real guts of the issue is while everybody is happy to knock VB, and yes, it's usually you arrogant QF staff that are the ones that scoff and carry on about them, it aint the general public. You increasingly find it hard to accept criticism about your own airline. So as far as I'm concerned, your hypocritical. And qfpaypacket, I havent yet read or heard anything that is contradictory to what I have read and heard previously about the likes of Geoff Dixon and co, so until I do, and I know a fair amount would join me in getting sick of the arrogance of the man on TV, then that's the stance.
Your remark about Tasmania thumpa are very curious, then again, one would expect that from an arrogance inherited from being in a company that is there but for the grace of god, and whom most of the decent guys have left and one in which is renowned for it's appalling employee treatment and probably, well, knowingly, standards. So while you sit there with your rose coloured glasses and tout your position, remember, as someone quoted recently, it could come to an end very abruptly, look at whats happened in Aviation in the last 18 months.
All it would take is for the proposed equity stake to occur in VB, and the associated alliances that would follow, and the arrogant, conceited smile that adorns the likes of qfpaypacket and thunpa will change as the threat of uncertainty rears it's ugly head.
I feel that the devil that QF knew, that being AN, was the devil they knew!!. And now with the uncertainty of the next likely competitor and JP Morgan putting a high probability on that being SQ, if you still believe your untouchable, your either very naive or very stupid.
So it's with that, bring on a VB and SQ alliance!!! there are two great regionals waiting in the wings to feed the alliance. Go REX and go Alliance.
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Frank,
I think you are right on the mark ! Unless these Q.F staff drop their fat cat , public servant ,mentality they may find themselves working for a once mighty airline whose cost base wont be able to compete with any serious cashed up competitor who allies themselves with D.J and the regionals . Shades of other once mighty airlines that once ruled the skies around the world.!
If anyone decides to compete with them in the business market they will do huge damage to the Q.F monopoly . There will be much more blood shed in the aussie aviation market yet and I'm tipping that most of it will be from the big red rat!
Many of my "well heeled" friends who have had to use q.f over the last 16 months are well and truly jacked off by the indifference of many Q.F staff they encounter. One has already dropped his account and is using D.J . These are people who were buying full fare Y/C or J/C tickets! It won't take too many punters like this to " walk " and Q.F is in serious **** !
If anyone read the transcipt of the business sunday show yesterday , Dixon sounds like he has the axe out. The bean counters are out to slash costs , interesting times ahead for sure!
There is no doubt in my mind that labour reform is the only way that the real cost savings can be achieved and the up coming F/A's industrial action could be the start of it.
I will be observing with interest.!
I think you are right on the mark ! Unless these Q.F staff drop their fat cat , public servant ,mentality they may find themselves working for a once mighty airline whose cost base wont be able to compete with any serious cashed up competitor who allies themselves with D.J and the regionals . Shades of other once mighty airlines that once ruled the skies around the world.!
If anyone decides to compete with them in the business market they will do huge damage to the Q.F monopoly . There will be much more blood shed in the aussie aviation market yet and I'm tipping that most of it will be from the big red rat!
Many of my "well heeled" friends who have had to use q.f over the last 16 months are well and truly jacked off by the indifference of many Q.F staff they encounter. One has already dropped his account and is using D.J . These are people who were buying full fare Y/C or J/C tickets! It won't take too many punters like this to " walk " and Q.F is in serious **** !
If anyone read the transcipt of the business sunday show yesterday , Dixon sounds like he has the axe out. The bean counters are out to slash costs , interesting times ahead for sure!
There is no doubt in my mind that labour reform is the only way that the real cost savings can be achieved and the up coming F/A's industrial action could be the start of it.
I will be observing with interest.!
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Business Sunday transcript 23/2/03QANTAS BATTENING DOWN
23 February 2003
Helen McCombie
"I mean this industry is in chaos. I mean hundreds of thousands of people are being put off, planes are being put against the wall... We’re trying to make sure we have got a sustainable company into the future."
On first reading, it's a good result from Qantas … a sharp recovery in the December half of 2002-2003 from the first half of the previous year, which was depressed by September 11 and the costs associated with the collapse of Ansett.
But investors took fright at warnings about a slowdown in bookings on some key routes because of jitters about a looming war in Iraq. Shares steadied and firmed slightly on Friday but there remains concern in the air.
CEO Geoff Dixon talks to Helen McCombie.
Reporter: You’re talking about challenges and difficulties in the aviation industry and increasingly fierce competition and discounting, there’s not a touch of Qantas crying wolf here?
Geoff Dixon, CEO, Qantas: Please Helen, how could you ever say that, I mean this industry is in chaos. I mean hundreds of thousands of people are being put off, planes are being put against the wall. There’s American Airlines are in bankruptcy, there’s great trouble in Europe, it is a difficult situation everywhere. We’re not crying wolf, as a matter of fact the exact opposite. We’re trying to make sure we have got a sustainable company into the future.
Reporter: But after all we you have got two important deals to stitch up this year, the joint services agreement with British Airways and the Air New Zealand deal?
Dixon: That’s right we have.
Reporter: And if you play your cards right you might get the trifecta, the shareholding cap lifted by the Federal government?
Dixon: Well we’d like to get that lifted because I think that you may have seen from our results today we realised our cost to capital would have done a lot better if we didn’t have that constraint over us.
Reporter: Isn’t it in your interest to cry poor a bit, to warn and to batten down the hatches?
Dixon: I’m not, look, people may think that but we’re not a cynical as people think. We’re not doing that, I mean if anybody thinks that Qantas as an international airline is crying wolf when there’s drum beats of war around everywhere, the threat of terrorism, there is the genuine, a genuine I drop in bookings which is highlighted this week, by the star alliance carriers. No, look, we are saying as it is, and we hope we can work our way through it. As a matter of fact I’m very confident we can but it will require a lot of restraint, a lot of hard work.
Reporter: But it is a way of negotiating with your union, with British Airways and the ACCC?
Dixon: No, it is not. We are not negotiating with our unions based on what is happening out there at the moment, we have made for an airline I believe a very, very good offer to our unions which includes in the main, sustainable employment and when we come out of the current difficulties that the industry faces and indeed the world faces, Qantas has a very, very bright future. We’re preparing for that.
Reporter: If Qantas is strong and profitable does it really need a weakened Air New Zealand?
Dixon: Um, I don’t believe Air New Zealand is necessarily weakened. Qantas is relatively strong compared to other airlines but that doesn’t mean it’s strong compared to many companies around the world. It is not a matter of needing it, we want a partnership. This industry will consolidate. If there is a ware in Iraq I believe we will have failures in airlines and the inevitable consolidation that must be necessary in an industry that has such high people and capital costs will happen. And what we are doing looking for a partnership with Air New Zealand in a market that is small compared to world standards and it is main competition is at the moment by government financed airlines which I happily say cannot go broke, but we can.
Reporter: You and Qantas have proved that despite all their diversities that you are up to the mark, that management and staff can more than hold their own?
Dixon: I think we are holding our own, yes.
Reporter: And this result was a very, very good result, so why are you so defensive? It was probably your best every result?
Dixon: I’m not being defensive, I’m very proud of the result and I’m very proud of the result on behalf of the Qantas people but what I am saying since the result which was December 31st, there’s been a whole global situation that has changed. There has been renewed threats of terrorism, we saw what happened in the United Kingdom last week, there has been continual threats of war in the Middle East and the consequences of that could happen as a result of that, so what we have seen is that we have indicated today that for the next 18 weeks bookings have come off, quotes quite substantially in some of Qantas’ major markets. We are making changes to our activities and the way we operate to ensure that we can continue to make the profit that we would like to make and we don’t want to make that because that goes to any particular person. What it does it enables us to buy the fourteen or fifteen billion up to possibly twenty billion dollars of aircraft so we can continue to run and it will enable most of the people in Qantas to have decent jobs.
Reporter: So what do you do about costs, how much more can you get out?
Dixon: It is not just a matter of taking costs out and slash and burn, and we haven’t been doing that for quite a few years. We must improve our productivity, we must improve the processes and how we run the airline, we must improve the cross section functionality that we have in the company and we intend to put a program in which we have been working on throughout the last six months, we’ve got special people in to do it, now not outsiders, we’re going to do it internally. It is going to be run by our chief financial officer, Peter Greg and we are hoping to be able to take on billion dollars worth of costs, meaning productivity improvements over the next three years, and it is not about people, it is about working better and smarter.
Reporter: So for instance how will you do it?
Dixon: Well that is up to us. We’ve got a plan and Peter’s going to implement the plan but it will improve the processes. This is an airline that has grown up with process over eighty two years. There are smarter ways to do things, part of us buying new fleet, more efficient aircraft will help us. The part of us putting single class aircraft on leisure routes will help us but there’s a lot of other ways to do business better. We’ve been working on it for six months, as I said we have a team internally and we’re starting to implement it now. And we must and that will ensure that Qantas grows and it will ensure that it’s job growth. I don’t know of many airlines any airlines, any airline that is a traditional airline meaning not one of the new start ups, that increased I employment by almost two thousand over the last twelve months as Qantas has. We’re not g crying wolf.
Reporter: Do you think you will have any problems with trying to improve productivity?
Dixon: Well if it involves people and changing work practices or getting out what we regard out moded work practices, we usually find there is some resistance yes.
Reporter: And you are prepared for that?
Dixon: Yes we are prepared for it.
Reporter: Was it fair to staff when the Qantas cut backs plan was leaked ahead of this result?
Dixon: I’ll tell you now, absolutely, we did not leak it from the Qantas senior management.
Reporter: So where did it come from?
Dixon: I don’t know where it came from because a lot more people than the Qantas senior management knew that what we were planning, what we were planning and we have been doing it now for about three weeks, is to ensure over the next to three to four months before the end of the financial year that when we make cut backs in flying that we have people leaving the company not by redundancies by buy to taking accumulated long service, ordinary leave and possibly if there are some want it, leave without pay. I think that is quite legitimate, it is a very, very decent way to do it.
Reporter: Qantas is pretty attractive at the moment, who could or would want to take you over?
Dixon: I don’t know, I don’t think they are allowed to. I think that the Qantas Sale Act prevents anybody taking us over. I don’t think that would ever happen at any rate and we would like very much like the Qantas Sale Act to be taken off so that we could encourage more foreign investment but also ensure that we get a lower cost to capital but I don’t think in any circumstances that would result in Qantas in being taken over.
Reporter: But at this point there would be no one who would want to take you over, so the shareholding cap doesn’t matter?
Dixon: Well it is not just about that but I’ve always said that, I don’t think that people are not going to take us over. I mean if there is hostilities in Iraq, if as in the industry settles down it will, I think no airline there would be a couple, would be as well placed a to take advantage of that as Qantas would be and perhaps we will be in the position to be able to look at whether there is potential opportunities out there, not people looking at us whether we are a potential opportunity.
Reporter: Do you think there are?
Dixon: No, I wouldn’t know because I don’t who is going to be left standing, all I do know is that we will be.
Reporter: Isn’t the rationale for the deal with Air New Zealand growing less because of the potential war with Iraq?
Dixon: No, it’s not. The rational for the Air New Zealand deal to me is as compelling today for Qantas and although I can’t speak on behalf of Air New Zealand, I would have thought for Air New Zealand as it was when we first muted it, and we would like to go ahead, but as I said today in another press interview that we will not pay a price, in other words a regulatory price or that is above what we think is fair.
Reporter: So in terms of regulatory price you mean you won’t make any concessions?
Dixon: No, we’ve already indicated we’d made concessions but there is going to be a point where for us for too many concessions it won’t be worth while going ahead. We know that, that’s sensible, we know what the bottom line is.
Reporter: Have you been sounded out about the concessions?
Dixon: No, but we do have a little bit of a smile that those paragons of free enterprise and competition, Virgin have asked for a three year moratorium on anybody else starting a low cost airline across the Tasman in that part of the world, that’s really competitive isn’t it?
Reporter: How do you think you are progressing with the ACCC?
Dixon: In this particular issue?
Reporter: With Air New Zealand?
Dixon: It’s been tremendously professional.
Reporter: But are you making progress?
Dixon: Well it is in the discussion period, they ask a lot questions and a lot of hard questions and I think we are answering the questions but we are not down to where we sit opposite each other and say well look, this is what we desperately need. What we need you to do and for us to say well we can do that or we can’t do it, but that is not thew way it happens at any rate, no it has been very good, we understand the position.
Reporter: Do you think it is going to take longer than that six months that you talked about initially?
Dixon: There is some discussion that it could be a month or two out, but in the current circumstances I’m not sure that’s going to change to the world.
23 February 2003
Helen McCombie
"I mean this industry is in chaos. I mean hundreds of thousands of people are being put off, planes are being put against the wall... We’re trying to make sure we have got a sustainable company into the future."
On first reading, it's a good result from Qantas … a sharp recovery in the December half of 2002-2003 from the first half of the previous year, which was depressed by September 11 and the costs associated with the collapse of Ansett.
But investors took fright at warnings about a slowdown in bookings on some key routes because of jitters about a looming war in Iraq. Shares steadied and firmed slightly on Friday but there remains concern in the air.
CEO Geoff Dixon talks to Helen McCombie.
Reporter: You’re talking about challenges and difficulties in the aviation industry and increasingly fierce competition and discounting, there’s not a touch of Qantas crying wolf here?
Geoff Dixon, CEO, Qantas: Please Helen, how could you ever say that, I mean this industry is in chaos. I mean hundreds of thousands of people are being put off, planes are being put against the wall. There’s American Airlines are in bankruptcy, there’s great trouble in Europe, it is a difficult situation everywhere. We’re not crying wolf, as a matter of fact the exact opposite. We’re trying to make sure we have got a sustainable company into the future.
Reporter: But after all we you have got two important deals to stitch up this year, the joint services agreement with British Airways and the Air New Zealand deal?
Dixon: That’s right we have.
Reporter: And if you play your cards right you might get the trifecta, the shareholding cap lifted by the Federal government?
Dixon: Well we’d like to get that lifted because I think that you may have seen from our results today we realised our cost to capital would have done a lot better if we didn’t have that constraint over us.
Reporter: Isn’t it in your interest to cry poor a bit, to warn and to batten down the hatches?
Dixon: I’m not, look, people may think that but we’re not a cynical as people think. We’re not doing that, I mean if anybody thinks that Qantas as an international airline is crying wolf when there’s drum beats of war around everywhere, the threat of terrorism, there is the genuine, a genuine I drop in bookings which is highlighted this week, by the star alliance carriers. No, look, we are saying as it is, and we hope we can work our way through it. As a matter of fact I’m very confident we can but it will require a lot of restraint, a lot of hard work.
Reporter: But it is a way of negotiating with your union, with British Airways and the ACCC?
Dixon: No, it is not. We are not negotiating with our unions based on what is happening out there at the moment, we have made for an airline I believe a very, very good offer to our unions which includes in the main, sustainable employment and when we come out of the current difficulties that the industry faces and indeed the world faces, Qantas has a very, very bright future. We’re preparing for that.
Reporter: If Qantas is strong and profitable does it really need a weakened Air New Zealand?
Dixon: Um, I don’t believe Air New Zealand is necessarily weakened. Qantas is relatively strong compared to other airlines but that doesn’t mean it’s strong compared to many companies around the world. It is not a matter of needing it, we want a partnership. This industry will consolidate. If there is a ware in Iraq I believe we will have failures in airlines and the inevitable consolidation that must be necessary in an industry that has such high people and capital costs will happen. And what we are doing looking for a partnership with Air New Zealand in a market that is small compared to world standards and it is main competition is at the moment by government financed airlines which I happily say cannot go broke, but we can.
Reporter: You and Qantas have proved that despite all their diversities that you are up to the mark, that management and staff can more than hold their own?
Dixon: I think we are holding our own, yes.
Reporter: And this result was a very, very good result, so why are you so defensive? It was probably your best every result?
Dixon: I’m not being defensive, I’m very proud of the result and I’m very proud of the result on behalf of the Qantas people but what I am saying since the result which was December 31st, there’s been a whole global situation that has changed. There has been renewed threats of terrorism, we saw what happened in the United Kingdom last week, there has been continual threats of war in the Middle East and the consequences of that could happen as a result of that, so what we have seen is that we have indicated today that for the next 18 weeks bookings have come off, quotes quite substantially in some of Qantas’ major markets. We are making changes to our activities and the way we operate to ensure that we can continue to make the profit that we would like to make and we don’t want to make that because that goes to any particular person. What it does it enables us to buy the fourteen or fifteen billion up to possibly twenty billion dollars of aircraft so we can continue to run and it will enable most of the people in Qantas to have decent jobs.
Reporter: So what do you do about costs, how much more can you get out?
Dixon: It is not just a matter of taking costs out and slash and burn, and we haven’t been doing that for quite a few years. We must improve our productivity, we must improve the processes and how we run the airline, we must improve the cross section functionality that we have in the company and we intend to put a program in which we have been working on throughout the last six months, we’ve got special people in to do it, now not outsiders, we’re going to do it internally. It is going to be run by our chief financial officer, Peter Greg and we are hoping to be able to take on billion dollars worth of costs, meaning productivity improvements over the next three years, and it is not about people, it is about working better and smarter.
Reporter: So for instance how will you do it?
Dixon: Well that is up to us. We’ve got a plan and Peter’s going to implement the plan but it will improve the processes. This is an airline that has grown up with process over eighty two years. There are smarter ways to do things, part of us buying new fleet, more efficient aircraft will help us. The part of us putting single class aircraft on leisure routes will help us but there’s a lot of other ways to do business better. We’ve been working on it for six months, as I said we have a team internally and we’re starting to implement it now. And we must and that will ensure that Qantas grows and it will ensure that it’s job growth. I don’t know of many airlines any airlines, any airline that is a traditional airline meaning not one of the new start ups, that increased I employment by almost two thousand over the last twelve months as Qantas has. We’re not g crying wolf.
Reporter: Do you think you will have any problems with trying to improve productivity?
Dixon: Well if it involves people and changing work practices or getting out what we regard out moded work practices, we usually find there is some resistance yes.
Reporter: And you are prepared for that?
Dixon: Yes we are prepared for it.
Reporter: Was it fair to staff when the Qantas cut backs plan was leaked ahead of this result?
Dixon: I’ll tell you now, absolutely, we did not leak it from the Qantas senior management.
Reporter: So where did it come from?
Dixon: I don’t know where it came from because a lot more people than the Qantas senior management knew that what we were planning, what we were planning and we have been doing it now for about three weeks, is to ensure over the next to three to four months before the end of the financial year that when we make cut backs in flying that we have people leaving the company not by redundancies by buy to taking accumulated long service, ordinary leave and possibly if there are some want it, leave without pay. I think that is quite legitimate, it is a very, very decent way to do it.
Reporter: Qantas is pretty attractive at the moment, who could or would want to take you over?
Dixon: I don’t know, I don’t think they are allowed to. I think that the Qantas Sale Act prevents anybody taking us over. I don’t think that would ever happen at any rate and we would like very much like the Qantas Sale Act to be taken off so that we could encourage more foreign investment but also ensure that we get a lower cost to capital but I don’t think in any circumstances that would result in Qantas in being taken over.
Reporter: But at this point there would be no one who would want to take you over, so the shareholding cap doesn’t matter?
Dixon: Well it is not just about that but I’ve always said that, I don’t think that people are not going to take us over. I mean if there is hostilities in Iraq, if as in the industry settles down it will, I think no airline there would be a couple, would be as well placed a to take advantage of that as Qantas would be and perhaps we will be in the position to be able to look at whether there is potential opportunities out there, not people looking at us whether we are a potential opportunity.
Reporter: Do you think there are?
Dixon: No, I wouldn’t know because I don’t who is going to be left standing, all I do know is that we will be.
Reporter: Isn’t the rationale for the deal with Air New Zealand growing less because of the potential war with Iraq?
Dixon: No, it’s not. The rational for the Air New Zealand deal to me is as compelling today for Qantas and although I can’t speak on behalf of Air New Zealand, I would have thought for Air New Zealand as it was when we first muted it, and we would like to go ahead, but as I said today in another press interview that we will not pay a price, in other words a regulatory price or that is above what we think is fair.
Reporter: So in terms of regulatory price you mean you won’t make any concessions?
Dixon: No, we’ve already indicated we’d made concessions but there is going to be a point where for us for too many concessions it won’t be worth while going ahead. We know that, that’s sensible, we know what the bottom line is.
Reporter: Have you been sounded out about the concessions?
Dixon: No, but we do have a little bit of a smile that those paragons of free enterprise and competition, Virgin have asked for a three year moratorium on anybody else starting a low cost airline across the Tasman in that part of the world, that’s really competitive isn’t it?
Reporter: How do you think you are progressing with the ACCC?
Dixon: In this particular issue?
Reporter: With Air New Zealand?
Dixon: It’s been tremendously professional.
Reporter: But are you making progress?
Dixon: Well it is in the discussion period, they ask a lot questions and a lot of hard questions and I think we are answering the questions but we are not down to where we sit opposite each other and say well look, this is what we desperately need. What we need you to do and for us to say well we can do that or we can’t do it, but that is not thew way it happens at any rate, no it has been very good, we understand the position.
Reporter: Do you think it is going to take longer than that six months that you talked about initially?
Dixon: There is some discussion that it could be a month or two out, but in the current circumstances I’m not sure that’s going to change to the world.
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good analysis sirjfp,
Fact is, in the USA, for quite some time now, there's been almost no such thing as the "business" market. There's just a market full of people wanting to spend less money to go where they want to go. Price sensitive (i.e. less than full listed fare) traffic is way over 90% of all traffic and climbing. The big guys sat there for years while Southwest, Air Tran, Jet Blue et al built up huge fleets, all crewed by volunteers.
Its not all sweatshop stuff either with the newer low cost carriers.....that sort of thinking might make you feel warm at night but it isn't the real world. The passengers will just not pay for lifestyles of the rich and famous any more but they will support reason and moderation.
It isn't the war that's worrying QF...its that the trend line of Virgin's incursion into the once monopoly (or dupoly) markets is unstoppable. Its not the 30% thats the issue...it's what it will be next year and the year after.
Anyway, its fun to watch. I might be wrong too...it's been 13 years since I was told that I was no longer relevant to Australian aviation. Just because big high cost carriers are dinosaurs everywhere else in the world doesn't mean that it will happen in Australia.
Fact is, in the USA, for quite some time now, there's been almost no such thing as the "business" market. There's just a market full of people wanting to spend less money to go where they want to go. Price sensitive (i.e. less than full listed fare) traffic is way over 90% of all traffic and climbing. The big guys sat there for years while Southwest, Air Tran, Jet Blue et al built up huge fleets, all crewed by volunteers.
Its not all sweatshop stuff either with the newer low cost carriers.....that sort of thinking might make you feel warm at night but it isn't the real world. The passengers will just not pay for lifestyles of the rich and famous any more but they will support reason and moderation.
It isn't the war that's worrying QF...its that the trend line of Virgin's incursion into the once monopoly (or dupoly) markets is unstoppable. Its not the 30% thats the issue...it's what it will be next year and the year after.
Anyway, its fun to watch. I might be wrong too...it's been 13 years since I was told that I was no longer relevant to Australian aviation. Just because big high cost carriers are dinosaurs everywhere else in the world doesn't mean that it will happen in Australia.
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sirjfp, thats the current word on the street. Couple of other points of interest.
1) SQ's decision on Australia is condition precedent on Iraq war. the sooner it's over, the sooner we'll see something. Quote from Choong, " Iraq will not change our decision, only the timing"
2) Silkair to increase Airbus fleet, with the option of an all one class config to compete with a low cost operation into Singapore.
3) Singaporean investors up the stake in REX.
4) Alliance and SQ heads in talks last week after STAR meeting.
5) SQ increases by 17% it's flights into Australia. SQ are now the second biggest, behind QF for international flights into and out of Australia.
6) AirNZ pulls out of Singapore routes. Singapore the only carrier flying Singapore direct NZ.
7) Quote from Choong " SQ investment in QF is in Geoff Dixon's head only"
It's interesting now that the dust has settled and everybody gives up on SQ coming here, you see a few little things going on behind the scenes.
But, nah, apparently what I say here makes thumpa laugh. I could give him uncle Frankies "kick the tyres and light the fires, switch on the hang onto your truss overhead sign" checklist for the 717. It being such a "great" bird though, might make the poor guy cry!! - now thats what I call a real whisperjet!!! onya thumpa, bring your own Vaseline to the party mate, this is kinda kinky, and I like that, on second thoughts, whats that endorsement on yer licence? Victa two stroke rating?
C'mon mate, you said the roses were blooming in your garden, go and take a big deep breath of them thar flowers and while your at it, look into the sky at those lovely 737NG's, the best ever 717 replacement.
1) SQ's decision on Australia is condition precedent on Iraq war. the sooner it's over, the sooner we'll see something. Quote from Choong, " Iraq will not change our decision, only the timing"
2) Silkair to increase Airbus fleet, with the option of an all one class config to compete with a low cost operation into Singapore.
3) Singaporean investors up the stake in REX.
4) Alliance and SQ heads in talks last week after STAR meeting.
5) SQ increases by 17% it's flights into Australia. SQ are now the second biggest, behind QF for international flights into and out of Australia.
6) AirNZ pulls out of Singapore routes. Singapore the only carrier flying Singapore direct NZ.
7) Quote from Choong " SQ investment in QF is in Geoff Dixon's head only"
It's interesting now that the dust has settled and everybody gives up on SQ coming here, you see a few little things going on behind the scenes.
But, nah, apparently what I say here makes thumpa laugh. I could give him uncle Frankies "kick the tyres and light the fires, switch on the hang onto your truss overhead sign" checklist for the 717. It being such a "great" bird though, might make the poor guy cry!! - now thats what I call a real whisperjet!!! onya thumpa, bring your own Vaseline to the party mate, this is kinda kinky, and I like that, on second thoughts, whats that endorsement on yer licence? Victa two stroke rating?
C'mon mate, you said the roses were blooming in your garden, go and take a big deep breath of them thar flowers and while your at it, look into the sky at those lovely 737NG's, the best ever 717 replacement.
