Men Who Killed Qantas - Matthew Benns [43]
The niggles were eventually worked out and years later Qantas staff looked back on the influx of domestic airline managers and thought that perhaps it was the international arm that had been ‘raped’ after all. ‘When we merged with Australian they brought in all those domestic managers and the cost-cutting began, it was the end of the glory days for Qantas,’ lamented one flight crew member.11 It began with the arrival of Strong. ‘He is a Trojan Horse,’ grimaced one onlooker.12
The future was signposted less than three weeks after Strong’s appointment, when the merged company announced a loss of $376.8 million and Pemberton signalled staff cuts and the axing of marginal routes as the way ahead. Strong cemented his position by bringing in two former Australian Airlines hands to undertake two more of the most senior jobs. Former Australian general manager of marketing Geoff Dixon quit his job at Ansett to head the Qantas commercial team and join former Australian colleague Gary Toomey, who took the job of Qantas chief financial officer. As the Australian Financial Review noted: ‘Australian Airlines is rapidly taking over Qantas – from the inside out.’13
Qantas staff were not the only losers. The Bureau of Transport Communications and Economics concluded that post-deregulation airfares were more expensive for passengers. Economy fares in the December quarter of 1992 were up 14 per cent, business class were up 12 per cent and first-class fares had risen six per cent. The forthcoming float of the airline was also subject to tough economic pressure, with the prospect of market share being slashed by Air New Zealand’s promised entry into the Australian market. The key stakeholders held a secret meeting in Canberra. Gary Pemberton took the floor on behalf of Qantas. Federal Transport Minister Laurie Brereton and British Airways’ Sir Colin Marshall listened as he spelled out the airline’s predictions of exactly what Air New Zealand’s arrival in Australia would do to business. By the end of the meeting the government’s pledge of a single trans-Tasman air market was a dead duck. Naturally Air New Zealand was not happy.
Other problems with the float were gradually buffeted aside. The Trade Practices Commission allowed British Airways and Qantas to pool their resources on the Kangaroo Route, and the federal government agreed to raise the level of foreign ownership of the airline from 35 to 49 per cent. This decision effectively allowed a further 24 per cent of the airline to be sold into foreign hands in addition to British Airways’ quarter share. The Qantas bottom line was also given a boost to make it attractive to investors by the government’s decision to switch two of its busiest travelling accounts, the Department of Defence and Department of Education, from Ansett to Qantas. Everything was in place. When the now familiar strains of ‘I Still Call Australia Home’ played out from television sets on the first Sunday in June 1995 and Aussie icon Smoky Dawson urged Australians to ‘pick up a prospectus’ it was no wonder the telephone lines ran hot. Even Olympic gold medal winners Hayley Lewis and Jane Flemming were pressed into service, along with Australian of the Year winner Mandawuy Yunupingu, to sheet home the green and gold message. Over 100,000 people called the hotline in the first two weeks of pre-sale publicity. Those who studied the prospectus closely were also bolstered by the federal government’s decision to settle a $100 million tax dispute between the Australian Taxation Office and the airline rather than have it drag down the profit projections before the sale.
When the share offer was finally opened to the public in July 1995, over 600,000 potential investors had applied for a prospectus. The $1.45 billion float was a huge success, with small investors quickly offloading their $1.90 shares to make a short-term killing. The embarrassment came in August when the Australian Stock Exchange released figures showing foreign investors held 517.5 million shares, breaching the federal