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Wendy is an IFE Agent responsible for aggregating airline news specifically related to Inflight entertainment. She compiles stories relevant to business travelers, airline industry folks, marketers and tech geeks. IFE News doesn't create original content, but rather posts compelling editorial from global media outlets.

Qantas debate avoids the tough questions

June 6, 2012 – 10:17 am, by Ben Sandilands

On the morning after the ultra late Qantas profit downgrade, and the deep harm that it did its share price, the key issues are being given the softly, softly treatment by some of the commentators relied upon in the media.

Such as the timing. It is outrageous by any standard that Qantas should wait until 5 June in the current financial year to announce a profit downgrade of up to 90% on an underlying EBIT basis, which is not even the basis on which a stock can be compared to another stock in terms of statutory results.

There is clearly something wrong, and very much out of synch with normal investor expectations of corporate behaviour, for Qantas to sit on this news when most observers anticipated a profit downgrade any time from late April to mid May at the latest.

If, as Qantas group CEO Alan Joyce is quoted this morning as saying, the issues it identified in its statements only became apparent and serious in recent weeks, then either the economic intelligence on which the company relies is grossly inadequate, or to be blunt, it lied.

It can’t possibly have any excuse for the lateness of the downgrade unless something else is in train within Qantas that derailed or distracted the usual processes.

Some shareholders might have been inclined to forgive Qantas for deliberately planning a meticulous operation last October in which it willfully stranded around 100,000 passengers world wide by grounding itself in order to successfully panic the government and force Fair Work Australia to rescind protected industrial action  by key unions.

But they were not forgiving yesterday when the same Kim Jong-il school of ‘look at me, look at me’ shock tactics were used against them. Where is this going to end?

Onlookers, employees, and shareholders, have been treated to shabby death threat stunts, shabby in the sense that they were incapable of sustaining a police investigation and ended without any charges being laid, a nasty and brutal stranding of customers, and now, a truly dubious mugging of shareholders with information that Qantas ought to have acted on with the same alacrity as Singapore Airlines, Cathay Pacific and Emirates in their warnings concerning the impacts of fuel prices and eurozone woes.

Qantas is affected by the same remorselessly damaging forces as the rest of the airline sector. But it is also afflicted with something akin to a corporate attention deficit disorder, and shareholders, and the ASX, ought to have guts to insist that it reform its standards of governance and disclosure.

Postscript Tony Webber, an informed and always interesting commentator on matters Qantas, as a former Qantas Chief Economist, lost it on ABC News 24 this morning when he said that Singapore Airlines, Emirates and Etihad ‘don’t have the same profit requirements’ as Qantas.

That is completely untrue. Webber cannot fail to be aware of the corporate pressures on each of these carriers, nor the public record statements made by their senior executives, nor the assessments circulated by investment houses, nor the clear evidence that Singapore Airlines had recently lost the plot, and come under intense pressure to reform its attitudes and business model, a process which doesn’t quite appear to be complete despite some earnest efforts by the current management of this listed company.

Qantas in many respects, is less a special case than it pretends, and more a company where the quality of its management and its engagement with its staff is a real, and unfortunately damaging, factor in its performance.

 

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