Irresponsible bosses

I’m out of the country at the moment, and possibly missing some nuance. On the other hand, I’m old enough to remember the ill-will the unions built up in the 1970s, with snap stoppages designed to inflict maximum disruption on the public and thereby maximise pressure on employers to settle quickly and on the government to broker a solution. The announcement, without warning, of a lockout by Qantas seems to be straight out of the same disastrous playbook. Even if it works, it must surely kill off any political goodwill for Qantas in the future, or at least as long as the current management is in charge. That’s bound to be costly given the importance of political decisions on things like landing rights for airlines, and the favourable treatment Qantas has had in the past (partly a leftover of its days as a national flag carrier).

Can anyone make a case that Joyce’s action makes sense?

195 thoughts on “Irresponsible bosses

  1. @Chris Warren

    Actually I found it, your right it’s really low, what about SIA staff pays? I have been comparing them and found that it’s higher than Qantas, at least in press releases of staff salaries. Yes, the finance industries pay is quite screwed up compare to the low income workers I have found, I know a few people that gets paid 2-3 times more in the finance industry in the same role in Singapore than in Australia.

    I was checking up SIA in comparing why Alan Joyce said Qantas is paying too much, when SIA pays more than Qantas and apparently makes more than double the profit Qantas makes (I know they are government subsidied).

  2. @Tom

    hc :
    …. Baggage handlers earn $80,000 per year (Ask school teachers what they think of that !) while some pilots are paid over $500,000. What on earth could Joyce do other than what he has done? … The pilots earn a packet and, let’s face it – they are not much more skilled these days than a bus driver. The technology does it. …

    Given that planes fly themselves nowadays and don’t apparently require any skill to fly, I am surprised they have pilots let alone pay them. Surely they are just getting a free seat up front and paid accommodation in exotic destinations?

    Or maybe the above claims are embarrassingly stupid and maybe the taxpayer ought not to be paying someone like “hc” who I would imagine could be in some nice cushy overpaid taxpayer funded job, with plenty of entitlements, high super, short hours, no real responsibilities, and no real performance requirements?

  3. @Chris Warren

    I have looked at that rate, I’m just not sure about the recent rate because I couldn’t find it. The information that captains of Boeing 777 at mid-point income bracket gets paid S$270,000 compare to S$233,270 for a vice president is on an article in Straits Times in 2007. I know news does edit their article or intentionally don’t reveal the bonus that might be awarded to the vice presidents but I don’t think they made up the pay rate for Boeing 777 captains; anyway here’s the link to a web copy of the article (I couldn’t find the original article on the web):

    http://travel.asiaone.com/Travel/News/Story/A1Story20070609-13259.html

  4. Alan Joyce’s achievements indicate that he is a clever man, a man fully capable of answering simple questions with simple direct and unambiguously clear answers, to be sure. Instead, in interviews, press releases, and now in his ‘evidence’ before a senate committee he has engaged in nothing but obfuscation, misdirection, spin, weasel words, twisting and turning, doing everything to avoid giving even the barest semblance of a straight answer and carefully couching his answers in a way in which he seems to be trying to leave himself the option to claim, later, he really meant something different to what people might have interpreted him to mean. One clear admission was extracted in the senate hearings. He did not let the government or Fair Work Australia know that he was contemplating taking the industrial action he did, choosing to ground the airline and lock out his workforce. He did not give either the faintest inkling of his intentions. What is also clear from the senate session is that he did not need to ground the airline, lock out his staff, and disrupt the travel of 70,000 Qantas customers to get Fair Work Australia to make the decision it did. He could have put his intention to lockout his workforce to Fair Work Australia and argued his case before them to get the same outcome, the outcome that was ultimately obtained from Fair Work Australia. Given his wilful action which damaged the Qantas brand and was not in the interests of shareholders, lets hope at least some shareholders start a class action against Joyce and the Board of Qantas, for their precipitous, ill thought out and unnecessary action which was not in the interests of shareholders and which must have destroyed shareholder value. Lets hope there is a class action because that is the only way that Joyce and the board will be brought to account.

  5. @Freelander

    i guess that shows you do not track the markets much if at all

    QAN has been generally upwards recently – yes there were a lot who made a killing on the first effect of the grounding (allowing for conspiracy theory that that was the real intended outcome – insiders getting rich(er) by having bought before and/or sold at the top of the 7% gain). Some people did in fact take profits after the rise – but since then the share prices have continued to trend upwards – even bucking the trends of the rest of the sector and market

    on that basis i would imagine the shareholders – most of whom are actually banks after all – would be rather pleased about his actions

    you write as if you think shareholders are mom and pop types or other little folk investing their savings etc – the truth is way way different – go back and look at the post i made of the shareholding

    the banks own QAN – and the banks are only into owning things for a profit

    hence whatever he does he does to make shareholders happy – and i’d be pretty sure that QAN’s main profitability lies with becoming very competitive in price and very aggressive in marketing the combination of brand name and price

    if that means shedding staff, old aircraft, old contracts etc then that is what will happen

    or maybe, the goal is to force renationalisation of an albatross at “market” rates

    who knows what the full deck of tactics cards looks like or even what the main strategy is but whatever it is i can guarantee that 99% of shareholders are

    H H A PPPP PPPP Y Y
    H H A A P P P P Y Y
    HHHH AAAA PPPP PPPP Y
    H H A A P P Y
    H H A A P P Y

    pop

  6. @Freelander

    I don’t know about the pilots but AIUI the baggage handlers are on a little over $37k … (that might be an after tax figure of course) Let’s say they are getting about 50k pre-tax. Not 80k …

  7. @Fran Barlow

    You mean that “hc”s figure of 80k was wrong. Gee. I’m surprised. Maybe his figure for the pilots of 500k is wrong as well? Maybe he was wrong about the planes flying themselves too?

    TPOP QAN isn’t doing well relative to Virgin over the last few months, but anyway, Joyce’s activities can’t have been great for Qantas. I would love to see him sued personally and lose some of that CEO salary. Some of the directors especially the ‘independent’ ones wouldn’t handle being sued very well. Have you looked at who is on the board of directors?
    If they were sued it would throw a real spanner in the works.

  8. My late father was a founding member of the first airline pilots union, the Australian Federation of Air Pilots. The owners of ANA told the the pilots (WW2-trained to a man and from both sides of the conflict) that they were just bus drivers and would be paid accordingly. Pilots responded by forming a professional association with a proud tradition of rigorously high standards, and we are all beneficiaries of that.

    The history of Australia’s LAMEs (licensed aircraft maintenance engineers) is similar.

    Australia’s relative isolation and dependence on international trade, especially tourism, demands that we have a national carrier that has the highest standards of safety, reliability and service – whether or not it operates at a profit should be secondary, and that is why QANTAS should not have been sold.

  9. @Ron E Joggles

    Apparently, or at least according to some, airline pilots aren’t even as meritorious as bus drivers. Aircraft fly themselves nowadays; Pilots are simply passengers with a forward seat.

  10. my son was trained as a pilot by Gordon Vette’s school – the premier commercial flight training school in NZ

    and i’m a programmer – technical, pretty good and very experienced

    so yes, aircraft will get to where they need nobody to fly them – nothing is more sure

    in the planes we have now if something happens, i’d want someone like Vette up front if at all possible else someone trained by someone like him

    and i’m happy to pay extra to have such a person up front

    but, like railroad engineers of the past who were the cream in their day, the days of highly trained and qualified pilots are numbered

    such is progress

    pop

    ps, Vette mentioned here

    http://airodyssey.net/1999/03/01/movie-flt771/

    http://en.wikipedia.org/wiki/Air_New_Zealand_Flight_901

  11. “Mr Joyce said his international plans were the only way the airline would survive and expand”

    Read more: http://www.smh.com.au/travel/travel-news/were-not-giving-up-say-qantas-unions-20111104-1n02h.html#ixzz1cmRlv5SF

    Alan Joyce’s statement is interesting in the sense that
    a) survival is compounded with expansion
    b) it seems to me his plan involves a change of the airline such that the existing airline ceases to exist.

    So, what is Alan Joyce saying?

  12. Alan Joyce has made much of the claim that he didn’t want the airline to die the death of a thousand cuts with proplonged union action. It is beginning to look as if he just wanted to deliver the one fatal blow as he now bribes people to fly Qantas free to a variety of destinations. It would have been cheaper to have negotiated with the unions in good faith. While the share price has risen as a result of Joyce’s actions it is still a sad affair when looked at long term. His leadership is not inspiring confidence overall.

  13. How could he negotiate Jill? The unions demands were unconscionable. Furthermore the unions had made it very clear they would not negotiate. They were prepared to settle for nothing less than capituation.

    Joyce had 3 choices. Give in to the unions, allow the slow death of the airline to continue, or force the matter to a head.

    He did the right thing.

  14. @Steve at the Pub From what I have read he was negotiating and close to a deal, until the board directed the lockout.

    Anyway, the subsequent loss of face and costs associated have eaten into their 2010 profits significantly. Apparently all to no avail, they still have to negotiate and this time with less of a position to bargain from.

    I can’t see how this has been good for business as the brand has been badly damaged.

  15. The cost associated with all these dispute can probably be recovered after a few years of operation more so with lower wage rises if the board wins the dispute. However, Qantas’ customer service will surely deteriorate as staff morale becomes worser. It’s probably the most suicidal attempt for a service intensive businesses (I know because I work in one). Once it reaches that stage I’m pretty sure Alan Joyce will start outsourcing air crews as well because the current wage level is quite high for other countries, not taking into account that he’ll pay them even less. When it goes that far it’s safe to say in their ads “We call Asia Home”.

  16. The brand damaged in the eyes of whom? The customers are thrilled at the airline’s actions (stopping the service uncertainty).

    Tom is bang on the button. Qantas is being expected to compete in a global marketplace, but to kowtow to Australian unions.

  17. @Steve at the Pub

    The brand’s damaged around the world. The service uncertainty has been about what that mad Irishman is going to do next, and because of the cost-cutting when one of the mechanical faults will finally be the one too many. Much as I dislike Virgin, and Branson, I don’t think I will be flying the flying Kangaroo anymore.

  18. @Ernestine Gross

    Yes. The story being peddled is a straight-out lie. Qantas has (or at least had) the whip hand in the domestic market because of the Qantas Club and better slots at the domestic airports, and the barriers to others coming in. As far as the domestic market goes the intention is to reduced costs to increase profits, not to improve services or lower prices. They are very profitable domestically already so here it is not a matter of survival. Internationally, allegedly they are losing money. That maybe so, but allegedly they have been loading a variety of other costs onto the International part that they wanted to make look unprofitable rather than allocating costs where they properly fell. Without an independent audit the truth would be extremely difficult to establish. What is clear is that Joyce is about the last person who ought to be believed. I wonder if they have a “contempt of Senate” in Aus. If they do they ought to consider throwing him in jail.

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