Qantas boss eyes Virgin's costs
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Qantas boss eyes Virgin's costs
Sat "Weekend Australian"
Qantas boss eyes Virgin's costs
By Steve Creedy
May 17, 2003
QANTAS chief executive Geoff Dixon has seized on Virgin Blue's $158 million pre-tax profit to attack work practices at his airline and foreshadow further upheavals for staff.
Targeting overmanning, rostering and duplication, Mr Dixon told staff in an internal memo obtained by The Weekend Australian that the airline's work practices "will and must" change.
He said Qantas needed the co-operation of workers to make the changes and avoid the massive upheavals and restructuring of the airline's international peers.
But the airline's biggest union last night rejected Mr Dixon's analysis, saying the workforce was already undergoing major restructuring.
"The Qantas he lives in on the ninth floor might not have seen too much restructuring but down where they're pushing back planes and dealing with passengers, there's plenty," said Australian Services Union assistant national secretary Linda White.
Mr Dixon said Virgin's greatest strength was its cost base, agreed to by unions, which delivered 30 per cent lower costs than Qantas in many areas.
"Qantas has been progressively lowering our overall cost base over some years, including moving our domestic costs closer to Virgin in the past 12 months, but the gap is still too large and progress is not fast enough," he said.
The Qantas chief said cost reduction would not involve downgrading the airline, and its service and product offering would remain.
"What will and must change are the way we deliver the product and our processes, work practices, overmanning, duplication and rostering," he said.
Qantas earlier this month warned its 2002-03 pre-tax profit would be 20-30 per cent below expectations because of SARS and the Iraq war and announced it would axe another 1400 jobs.
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Qantas boss eyes Virgin's costs
By Steve Creedy
May 17, 2003
QANTAS chief executive Geoff Dixon has seized on Virgin Blue's $158 million pre-tax profit to attack work practices at his airline and foreshadow further upheavals for staff.
Targeting overmanning, rostering and duplication, Mr Dixon told staff in an internal memo obtained by The Weekend Australian that the airline's work practices "will and must" change.
He said Qantas needed the co-operation of workers to make the changes and avoid the massive upheavals and restructuring of the airline's international peers.
But the airline's biggest union last night rejected Mr Dixon's analysis, saying the workforce was already undergoing major restructuring.
"The Qantas he lives in on the ninth floor might not have seen too much restructuring but down where they're pushing back planes and dealing with passengers, there's plenty," said Australian Services Union assistant national secretary Linda White.
Mr Dixon said Virgin's greatest strength was its cost base, agreed to by unions, which delivered 30 per cent lower costs than Qantas in many areas.
"Qantas has been progressively lowering our overall cost base over some years, including moving our domestic costs closer to Virgin in the past 12 months, but the gap is still too large and progress is not fast enough," he said.
The Qantas chief said cost reduction would not involve downgrading the airline, and its service and product offering would remain.
"What will and must change are the way we deliver the product and our processes, work practices, overmanning, duplication and rostering," he said.
Qantas earlier this month warned its 2002-03 pre-tax profit would be 20-30 per cent below expectations because of SARS and the Iraq war and announced it would axe another 1400 jobs.
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16 May 2003
Message from the CEO
At a time when just about all airlines in the world, including Qantas, are suffering serious difficulties from the effects of the war in Iraq and SARS, our domestic competitor Virgin Blue has reported a pre-tax profit of $158 million. This is an excellent result for a start-up airline.
When announcing the profit, Virgin said its business had been “relatively well insulated” from the challenges of Iraq, Bali and SARS.
Virgin’s result was cost, not revenue driven. Their greatest strength is their cost base – a base agreed to by the Australian Union movement and which gives Virgin around 30 per cent lower costs than Qantas in many areas.
I have said repeatedly – this is not a situation that can continue. Qantas has been progressively lowering our overall cost base over some years, including moving our domestic costs closer to Virgin in the past 12 months, but the gap is still far too large and progress is not fast enough.
In the current industry circumstances, we have no option but to move more quickly to totally review and change substantially our domestic airline.
This will not involve a downgrade of the airline. Our superior seat pitch, service and product offering will remain. What will and must change are the ways we deliver the product and our processes, work practices, overmanning, duplication, rostering – all those elements built into the Qantas system over many years. These elements run into tens of millions of dollars and do much to threaten the company’s growth and your long-term security of employment.
Qantas is by any standards a great and a successful airline. We will only remain so by ensuring a competitive position in all segments of our business.
I ask for your co-operation as we make these changes. Your support for our company now will ensure we do not have to undertake the massive upheavals and restructuring of most of our international peers.
Geoff Dixon
Message from the CEO
At a time when just about all airlines in the world, including Qantas, are suffering serious difficulties from the effects of the war in Iraq and SARS, our domestic competitor Virgin Blue has reported a pre-tax profit of $158 million. This is an excellent result for a start-up airline.
When announcing the profit, Virgin said its business had been “relatively well insulated” from the challenges of Iraq, Bali and SARS.
Virgin’s result was cost, not revenue driven. Their greatest strength is their cost base – a base agreed to by the Australian Union movement and which gives Virgin around 30 per cent lower costs than Qantas in many areas.
I have said repeatedly – this is not a situation that can continue. Qantas has been progressively lowering our overall cost base over some years, including moving our domestic costs closer to Virgin in the past 12 months, but the gap is still far too large and progress is not fast enough.
In the current industry circumstances, we have no option but to move more quickly to totally review and change substantially our domestic airline.
This will not involve a downgrade of the airline. Our superior seat pitch, service and product offering will remain. What will and must change are the ways we deliver the product and our processes, work practices, overmanning, duplication, rostering – all those elements built into the Qantas system over many years. These elements run into tens of millions of dollars and do much to threaten the company’s growth and your long-term security of employment.
Qantas is by any standards a great and a successful airline. We will only remain so by ensuring a competitive position in all segments of our business.
I ask for your co-operation as we make these changes. Your support for our company now will ensure we do not have to undertake the massive upheavals and restructuring of most of our international peers.
Geoff Dixon
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In other words, the cubicle dwellers at QF have failed to achieve desired profit targets from income so to compensate for their failures, the staff will pay en masse by costs being reduced (beyond a reasonable level!) which results in reduced conditions, less pay, etc.
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I reckon half a start would be cutting HobKnob salaries and perks, all too often we see management creaming the top and then "cry me a river" sob stories follow. Granted tough times but please keep it real!
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Couldn't agree more. Haven't seen Margaret et al. offering to give back the multi-$mil bonuses. AN falls over, they claim responsibility for the great results that follow. Shouldn't they also accept responsibilty for the current numbers? They seem to want remuneration tied to performance.... So much easier to 'shed a few'.
And they wonder why people get angry and want to lynch them?
And they wonder why people get angry and want to lynch them?
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SARS costs Qantas chief $1m bonus
Matthew Denholm and Malcolm Cole
09may03
THE SARS crisis which has ravaged Australia's tourism industry and forced another round of job cuts at Qantas has cost the airline's chief executive his annual performance bonus which last year was worth a million dollars.
Qantas chief Geoff Dixon yesterday told union leaders who were meeting with him about the fourth round of job losses in as many months that none of the airline's executives would receive performance bonuses this year in light of mass redundancies.
A Qantas spokeswoman last night confirmed the pledge.
"It is correct that no executive will be receiving a bonus this financial year, given the environment," she said.
She was unable to say what the performance-related bonuses would have been, but pointed to those paid last financial year as an indication.
In 2002, Mr Dixon received a performance bonus of $1 million and chief financial officer Peter Gregg was paid $672,000 extra.
Qantas unions have asked the ACTU to help them present a united front against the airline's repeated cuts.
Also yesterday, it was revealed Australia is moving to capitalise on its SARS-free status with a $7.9 million tourism campaign targeting Japan and New Zealand.
Tourism Minister Joe Hockey announced the campaign in response to claims from the inbound tourism industry that it faces a $2 billion loss because of SARS and the Iraq war.
Mr Hockey said Australia was also "negotiating significant arrangements in the US" for a relaunch of tourism promotion, put on hold earlier this year because of the war.
"We have just launched a more than $7 million campaign into our number-one market, NZ, and our number two market, Japan, promoting Australia as a destination," he said.
The campaign will pump $6.8 million into advertising on Japanese television, in magazines and on the internet.
It will target travel groups identified as being "more robust than others", such as backpackers and families.
Matthew Denholm and Malcolm Cole
09may03
THE SARS crisis which has ravaged Australia's tourism industry and forced another round of job cuts at Qantas has cost the airline's chief executive his annual performance bonus which last year was worth a million dollars.
Qantas chief Geoff Dixon yesterday told union leaders who were meeting with him about the fourth round of job losses in as many months that none of the airline's executives would receive performance bonuses this year in light of mass redundancies.
A Qantas spokeswoman last night confirmed the pledge.
"It is correct that no executive will be receiving a bonus this financial year, given the environment," she said.
She was unable to say what the performance-related bonuses would have been, but pointed to those paid last financial year as an indication.
In 2002, Mr Dixon received a performance bonus of $1 million and chief financial officer Peter Gregg was paid $672,000 extra.
Qantas unions have asked the ACTU to help them present a united front against the airline's repeated cuts.
Also yesterday, it was revealed Australia is moving to capitalise on its SARS-free status with a $7.9 million tourism campaign targeting Japan and New Zealand.
Tourism Minister Joe Hockey announced the campaign in response to claims from the inbound tourism industry that it faces a $2 billion loss because of SARS and the Iraq war.
Mr Hockey said Australia was also "negotiating significant arrangements in the US" for a relaunch of tourism promotion, put on hold earlier this year because of the war.
"We have just launched a more than $7 million campaign into our number-one market, NZ, and our number two market, Japan, promoting Australia as a destination," he said.
The campaign will pump $6.8 million into advertising on Japanese television, in magazines and on the internet.
It will target travel groups identified as being "more robust than others", such as backpackers and families.
