Qantas: apologia from new CFO after the condemnation of Alan Joyce CEO salary package

The Sydney Morning Herald, presumably in the interests of fairness has been running both ‘sides’ of an argument about the success (or otherwise) of Qantas’s flying operations.

It started with an op-ed piece from Steve Purchase, (Federal Secretary of the Australian Licensed Aircraft Engineers Association) when CEO Alan Joyce was announced to have received a salary including bonuses this year of AU$24 million.

There is a lot to get through, so I am going to refer you to the original articles (below), and just tempt you with some pithy morsels here.

From the Union (professional association)

‘After Qantas announced a $2.8 billion loss in 2014, staff were all called on to freeze their wage levels for 18 months, a call that my union was first to heed in order to help the struggling airline. Assuming the alternative possibility of CPI-based wage increases, employees now forgo $60 million each year as a result of the ongoing wage freeze. At the same time executive and senior management remuneration packages have increased by – you guessed it – $60 million each year. Not one cent forgone by employees to help the airline has gone into reinvestment or new aircraft.’

Steve Purchase, Federal Secretary of the Australian Licensed Aircraft Engineers Association in an Op-Ed piece in the Sydney Morning Herald

From Qantas

And that article was responded to by Vanessa Hudson, CFO of Qantas, I think less ably than the original article. But anyway, here is a sample:

“At the end of the day, a company should be judged on how well it balances the interests of customers, shareholders and employees. Qantas did have an 18-month wage freeze for employees, and a two-year freeze for executives, when times were tough. Since then, we’ve set aside $340 million in non-executive bonuses for the turnaround and record results. That’s on top of 3 per cent annual wage increases. This may be one factor behind the highest levels of employee engagement in the company’s history. Qantas customers are benefiting from $2 billion of investment each year – things like inflight WI-FI, upgrades to aircraft and new lounges. It’s why our customer satisfaction has also reached record levels.”

Vanessa Hudson, Qantas CFO

Comments – where the good stuff is

As is the case these days – the real interest is in the comments sections to these articles.

Again, I will let you read them yourselves, but here is a pithy comment from Sam:

11 years as CEO.

Zero aircraft ordered for Qantas.

(787s were ordered by Dixon, before anyone mentions it…)Sam in comments to Venessa Hudson comments in SMH article

You can find the article by Steve Purchase in the SMH here, and the response from Venessa Hudson here. Don’t forget to skim down the comments sections too.

The Sydney Morning Herald runs behind a paywall, but usually, you can sample a few articles for free. Obviously you or I would never try to manipulate this by using VPN’s or incognito browsers.

2PAXfly Takeout

I’m not sure where I sit on this. I think Joyce’s call to halt Qantas flying was audacious, and alarming especially for staff and customers, less so for shareholders. It certainly got everyone’s attention, and maybe that was its point.

Has he turned the airline around? Well yes, but the question is for the better – long term? I’m not sure.

On the other hand, as a better-off-than-most person, I have a lot of sympathy for this point that Steve Purchase makes:

Even if Qantas was well run, I do not believe any one person deserves a yearly salary package that an average person couldn’t spend in a lifetime.

Steve Purchase, Federal Secretary of the Australian Licensed Aircraft Engineers Association in an Op-Ed piece in the Sydney Morning Herald