Men Who Killed Qantas - Matthew Benns [93]
The falling share market also hit the Qantas super fund. The collapse in value meant it was almost $300 million short of the money it needed to meet its obligations. More than 13,000 current and former Qantas employees had guaranteed fixed payouts on retirement, no matter what happened to the fund. The airline was faced with the possibility of having to meet the shortfall, threatening to put another massive burden on the already beleaguered bottom line.
Joyce responded by swinging the axe. Qantas had already laid off 1,500 workers at the end of 2008 and shelved plans to hire another 1,200. In March Joyce saved $24 million a year by slashing 20 per cent of the senior management team – axing 90 management roles. One of the first ten to go was head of engineering David Cox, who himself had overseen the cutting in operation costs that had saved $500 million and led to the ongoing battle with the unions on maintenance issues. Another 68 managers were tapped on the shoulder and told to leave and 12 others were offered different, lower paid positions. Another $2.69 million was saved when Dixon’s old commercial chief, John Borghetti, quit after 36 years with the company. However, two people had to be appointed to fill his shoes: Rob Gurney took over the commercial side and Lesley Grant became the executive manager of Customer, Product and Marketing. The old Dixon segmented style of management was being dumped and a new ‘flatter’ model brought in, together with a management pay freeze.
Joyce was leading from the front. Mahogany row had been a pretty cushy place for a while so Joyce had plenty of fat to trim. Three weeks later he announced another 1,750 jobs would be axed, 500 of those in more junior management. ‘It’s certainly the toughest period I have seen and I have been in the industry for 20 years,’ he said.7 And you know things are bad when the unions start agreeing with the management. ACTU secretary Jeff Lawrence came out to say the airline needed to be ‘saved’ from foreign government-backed airlines. ‘We are also concerned about the unfair competition Qantas faces from airlines which are owned or propped up by overseas governments,’ he said.8
The fear stemmed from a Green Paper in which the government said it was committed to liberalisation. However, it also said that commitment had to be balanced against the national interest. Many stakeholders had their say. A White Paper with recommendations for the government to consider on the future of the Australian aviation industry was due out at the end of the annus horribilis. Watching it keenly would be the 35,000 Qantas employees who have a strong link with the airline’s past as well as a stake in its future.
Qantas is full of staff who remember the good old days. They were the good old days because it was a nationalised industry full of fat. Taxpayer-funded fat. A system that was ripe for abuse. A pilot recalled: ‘My neighbour needed some parts for his barbecue. Because of the high temperatures involved, these four rings needed to be made of a special metal and the quotes were coming in at hundreds of dollars each. I told him not to worry. On my next flight I asked a purser who owed me a favour to slip me a bottle of Scotch. I took that down to the engineering department and by the end of the day my neighbour had four new parts for his barbecue.’9 This is the kind of abuse that is cited as the reason for changing the way things worked. The question is, have things changed for the better? Instead of a pilot’s neighbour getting a few parts for his barbecue, it is the fat cats at the very top who are pocketing huge amounts of money. But even that is not the real issue.
Qantas is full of staff who remember the good old days when the emphasis was on safety, not profit. All that fat, including readily available materials, meant broken parts were fixed fast. In fact, things were fixed before they were broken. If the manual said a part needed to be replaced after so many hours’ flying time – and aircraft manufacturers build in big margins for safety