The Qantas decision to split its full-service operation in two businesses (International and Domestic) and appoint a highly paid chief executive for each has come under fire from unions and some business analysts. The verdict of financial analysts has generally been more favourable.
ABC News examined the decision on its The Business program. Chief executive of the Australian Shareholders’ Association, Vas Kolesnikov, told the program Qantas was struggling and would “no doubt make a loss this year”.
A loss would be a major blow for Qantas, one of the world’s very few consistently profitable airlines. Qantas has managed to turn a profit each year for the past decade.
Kolesnikov said the Qantas stock price had fallen from AUD6 to AUD1.40.
The Business reporter Andrew Robertson said that fund manager Roger Montgomery had been studying Qantas’s annual reports for the past decade and had found that while the airline’s directors and senior management had “rewarded themselves handsomely”, shareholders had gone backwards.
Qantas’s net profit had dived from over AUD400 million a decade ago to AUD250 million last year.
Robertson said that Montgomery agreed with Kolesnikov that Qantas would make a loss this year. Yet over the past decade, the pay of Qantas directors and the airline’s most senior executives had jumped from AUD7 million to AUD17 million, a rise of 250%.
Other financial analysts reacted more favourably to the Qantas move, The Australian reported.
While not touching on the profitability issue, the paper noted that Goldman Sachs analysts said the split was likely to improve performance and accountability, and those at Deutsche Bank and JPMorgan approved as well.
Meanwhile, the Qantas decision to slash routes across the Northern Territory (announced a day after the restructure) has come under heavy fire from the Transport Workers’ Union (TWU).
National secretary Tony Sheldon said the move would do “untold damage to tourism and economic development in regional Australia and reinforces senior management’s indifference to the future of Australian aviation”.
Sheldon said that tourism was central to the Northern Territory’s economy but the Qantas cuts threatened the future viability of the industry.
“Many areas in the Northern Territory have substantial mining and exploration projects that are due to come into operation. With these cuts in flights the question is now how will workers reach these projects?
Sheldon spoke of a “triple whammy from Qantas to disengage from Australia, following Monday’s decision to cut 535 heavy maintenance jobs in Victoria and Tuesday’s publication of a road map for the breakup of the airline”.
In stark contrast to the pilots’ union AIPA, which welcomed the appointment of Simon Hickey as chief executive of the newly created separate Qantas International business, Sheldon referred to “revelations that the newly minted CEO of Qantas international Simon Hickey was director at Air Pacific when it paid for the drafting of anti-worker anti-union laws for the Fijian military junta”.
Sheldon said that this week’s “battery of announcements and revelations from Qantas proves once and for all that management is proceeding apace with their break up of Qantas.
“They now employ flight crew in Australia on as little as AUD400 dollars a month. Senior executives admit that Qantas will no longer employ staff directly but will outsource all future jobs. They have undermined national security by closing heavy maintenance facilities. Now they will devastate the economy of the Northern Territory by stripping services.”
Sheldon concluded: “The Australian community needs to stand up to the ruthless agenda of the board, soon all that will be left of Qantas will be a logo on a plane and a frequent flyer program.”
Written by Peter Needham