Men Who Killed Qantas - Matthew Benns [67]
First, the question arises as to what kind of corporate culture allows illegal behaviour to emerge among corporate executives and continue for extended periods of time. If these corporate leaders promote a cut-throat culture where anything goes in order to maintain record profits, then it’s not too long before corners are cut and executives get tempted to start ‘crossing lines’.
Clearly, knowing when the rot in corporate culture is starting to set in remains a central personal challenge for any CEO and board. Second, while a CEO and board may not be directly involved in cartel behaviour or other wrongdoing, they must always be ready to take moral responsibility for the failure of their executives to comply with the law.
Did the CEO or board know of the possible wrongdoing or did they just fail to spot the warning signs? Did they simply not care because their only focus was with maintaining record profits?’21
The question remained unanswered. The entire sorry saga said a lot about Qantas at the time – none of it good. The corporate culture within the company encouraged price fixing, cargo customers were ripped off. That spoke volumes about the management’s attitude and love of profit. It said even more to the people working within the airline. A longstanding and loyal member of staff had done what he was told, even though it was wrong. When the company was caught out, it abandoned him. After McCaffrey was thrown to the legal wolves, the worrying seeds of doubt were sown within Qantas’s once loyal staff. The message to them was clear – if something goes wrong, you are on your own.
‘THIS IS A momentous day in the history of Qantas and I’d like to wish you all a very Merry Christmas, our customers a very merry Christmas, and our shareholders a very merry Christmas.’1 Qantas chairman Margaret Jackson closed the press conference and embraced the airline’s chief executive officer, Geoff Dixon, as the cameras flashed. ‘I wasn’t going to intrude,’ laughed Airline Partners Australia (APA) spokesman Bob Mansfield, who was happy to watch from the sidelines, looking all the while like the cat who swallowed the canary.2 It was an eyebrow-raising $11.1 billion hug that said everything about one of the most controversial and badly botched takeover attempts in Australian corporate history.
In 2006 Macquarie Bank put the old Project Suzie band back together. By November the new consortium, called Airline Partners Australia, was knocking on Dixon’s door with a $10.9 billion offer to buy Qantas’s publicly listed shares and put the airline into private hands. The deal was not considered good enough and so the consortium went away and returned in December with an offer of $11.1 billion – $5.45 a share plus a 15 cent dividend. The clincher was that the consortium wanted to keep the Qantas senior managers in place. On top of that it agreed to underwrite future aircraft purchases, providing Dixon and his team with a perfect answer to how they would pay for a new Qantas fleet. The capital investment program would help buy 70 new planes over five years. When Jackson, Dixon and consortium spruiker and ex-Telstra boss Mansfield held that first very huggable press conference to announce and endorse the bid, Qantas shares were trading at $4.10. The buyout seemed like a good idea at the time.
At the press conference Dixon assured passengers, shareholders and staff that it would be ‘business as usual’. He said: ‘It should be absolutely seamless for passengers and I am quite sure it will be.’ And he said the management restructuring program and changes planned for the airline would go ahead, including a $3 billion cost-cutting program: ‘We expect to grow further through further investment, so there’s no reason to think this is going to be any great revolution.’3
But it would be. Even at this early stage the private equity buyout plan carried the Macquarie signature of being funded by a massive amount of debt, which would be saddled onto the airline. Dixon was confident the debt would not affect