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Qantas wins Greens support but will it win Govt backing?

February 14, 2014 Aviation, Headline News 3 Comments Email Email

egtmedia59Portraying yourself as the underdog is always a useful move in Australian politics or business and Qantas appears to be winning the battle to do just that.

The airline is striving to play the role of gallant little Aussie battler facing the mighty behemoth of Virgin Australia – whereas many people, at least until recently, might have viewed it the other way around.

In a private speech at Parliament House, Qantas chief executive Alan Joyce tried to distinguish Qantas from other companies seeking corporate welfare. Qantas is not Holden, seems to be the gist. More-fun-in-the-Philippines_250X250px

The Canberra Times has reported some startling comments from Federal Treasurer Joe Hockey.

Hockey said Qantas faced a “2000-pound gorilla” in the form of Virgin Australia, which is largely foreign-owned. Hockey added that although his instinct was for government to not support individual businesses, Qantas had a “ball and chain” around its leg in the form of the Qantas Sale Act.

The Qantas Sale Act restricts foreign ownership of Qantas to 49% so the majority stays in Australian hands.

Hockey’s comments echo Qantas arguments so it looks like Qantas has won the first round.

Furthermore, Qantas, which is seeking a government-backed debt guarantee, has won support from two unlikely bedfellows: the Greens, who say the Australian government should help Qantas, provided the airline pledges to protect jobs; and Dan Tehan, convenor of the Coalition’s influential Friends of Tourism group and Liberal member for a west Victorian seat.

The Federal Government’s determination not to support individual businesses was shown recently in the cases of Holden, SPC Ardmona and Toyota. But Qantas may be an exception.

Australia’s biggest regional airline, Rex, warned recently that the aviation sector would collapse without government support. The government is still mulling that one.

Qantas announced last December that it was headed to a half-year loss of AUD 300 million.

Yesterday, Qantas issued the following statement on Hockey’s comments: “We welcome the latest comments from the Treasurer on the challenges facing Qantas, particularly the acknowledgement that we are essentially competing against foreign governments because of the way Virgin Australia is funded. Our discussions with government on levelling the playing field are ongoing, as is our work to strengthen our business.”

One of Australia’s most experienced aviation correspondents, Ben Sandilands, had a few words to say about the matter in his Plane Talking blog on yesterday.

Sandilands singled out comments from Friends of Tourism chairman Tehan that the Qantas Sale Act was preventing Qantas accessing fresh capital raisings.

“This is of course, complete rubbish,” Sandilands wrote. “Qantas never had the slightest problem making capital raisings, most of them oversubscribed, under the ‘restrictive’ Qantas Sale Act, until the current management took over five years ago.”

Sandilands also wondered why, in all the talk about levelling the playing field for Qantas, there has been little comment about the decisions made by Joyce and his management team.

“Not a word about his [Joyce’s] absurd decisions to tackle the customers of the airline rather than the unions by shutting it down back in 2011 and then surrendering the carrier to compulsory FWA [Fair Work Australia] arbitration which did nothing to improve the labour issues he continues to complain about,” Sandilands wrote.

“Not a word in this morning’s press about his responsibility for wasting extravagant sums of money on overseas ventures very similar in nature to the Virgin Australia Holdings arrangements with foreign airline investors in this country which he finds so objectionable.

“And nothing about the lunacy of growing capacity in the carrier faster than it can grow its business, a key factor in continuing for investors what so far are five years without dividends and a totally trashed share price.”

Will Qantas get a government-backed debt guarantee? Does it deserve one? The jury is still out. What do you think?

Written by : Peter Needham

Currently there are "3 comments" on this Article:

  1. gnits says:

    …..sandilands’ views are his own and his points are not necessarily correct for everyone to agree or believe…he just make them sound so believable… if you are a joyce hater you’d probably agree with him… but Sandilands opinions are actually a lot of rubbish too…

    the mere fact he mentioned capital raising was not a problem until joyce took over 5 years ago is a clear indication he was just up to blaming the current management under joyce…and never gave a good detailed reason why….

    sandilands also mentioned about the shutting down of qantas to tackle the customers rather than union is also one of his misleading opinions… the shutting down was a brilliant move and it stopped the absurd union’s tactic to damage qantas service further to its customers…and the customers, well, who among them remember the anger of the shut down?…probably just those who were affected by it at that time…. opinions were divided but who cared to remember?…only a handful…and those who threatened they will never fly qantas again were actually back after a short while…

    the overseas ventures failed because of too much opposition and negative opinions….so it is just right for qantas to oppose competitors’ move that will affect its ability to fairly compete…..yes, make them fail too…

    no dividends and thrashed share prices?, well, as I’ve said, before joyce took over 5 years ago the australian airline industry operates in a totally different scenario…which sandilands also failed to factor….

  2. Ken Buzza says:

    “gnits” perhaps you would like to have a quick peek at the airline routes that QF flew throughout the early years of the 747/200 introduction. These routes continued through the 70/80/90’s as the fleet grew, then the management changed as people like Dixon and all the other money grabbing boards lined up to make their millions yet offer nothing in return. Joyce who came from nothing and is still nothing in the eyes of the past and present staff, continued with the help of the Board to dismantle a once great icon of Australian history. We dont really know your background, nor do we care.

  3. Vivenne Smith says:

    Gnits. i was a Qantas customer and i actually work for my living.
    You say….”and the customers, well, who among them remember the anger of the shut down?”
    Well I do.
    You say….and those who threatened they will never fly qantas again were actually back after a short while…
    Well actually…..i am forced to use Jetstar occasionally due to routes and connection times but will use other airlines in preference if i can. But i havent flown on the “giant red rat” itself since.
    there will need to be an awful lot of water under the bridge before i trust Qantas again….my apologies to hardworking Qantas staff who are doing their best to provide a service to their customers

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