Men Who Killed Qantas - Matthew Benns [95]
The one bright star in the Qantas firmament is Jetstar, the airline Joyce built. He was unpopular because he did it by cutting costs; today it is starting to look like he saved jobs. But even he admits that it is not possible to apply the Jetstar formula of success to all Qantas routes. ‘Qantas international routes to LA and London need the combination of premium and leisure traffic. They will never be Jetstar routes. Where the problems are, Jetstar is not the solution,’ he said in 2009.13 In a year that saw over 30 airlines go to the wall, Qantas remained one of the better contenders for survival, largely because of the performance of Jetstar. Qantas, together with Singapore Airlines, remained one of only four carriers in the world to have an investment-grade credit rating.
But being the best swimmer on a sinking ship is no guarantee of survival. ‘We have to be prepared for it to get worse, but also better. There is a lot of volatility and if you get ten economists in they’ll tell you ten different things and that makes it hard for us to forecast and to predict. We’ve been very good throughout our history of adapting to the changing environment,’ said Joyce.14
He backed that up in June 2009, telling the Australian’s aviation writer, Steve Creedy, that the airline was in ‘preservation mode’.15 All plans to float the Frequent Flyer, pilot training, engineering and freight arms of the airline as separate businesses were put on hold. He said that deferring the delivery of new aircraft promised a $1 billion cash boost to swell the $3 billion reserves sitting in the bank. On top of that, Qantas was coping with the 20 to 30 per cent drop in premium-class passengers by simply reallocating first-class seats as business, and some of the business-class seats as premium-economy. ‘So, by taking first class off the selling [configuration] we saved a cabin crew member,’ he said, very practically.16 Of course the redundancies were also saving money, as was getting the staff to take all their holidays. ‘We have a large number of pilots and cabin crew now on long-service leave and leave without pay, and we’re working through the airport staff on the same arrangements,’ he said.17
At least Joyce was not asking his staff to work for a month for free, as partner British Airways was doing. BA Chief Executive Willie Walsh led the charge by forgoing his bonus and working for nothing for the month of July – of course, he could afford to after receiving a 5 per cent pay rise that pumped his basic salary up to $1.5 million. The staff was not happy. Given the British airline’s parlous financial state, Joyce was probably hugging himself in relief that the partnership deal had fallen through.
However, he still had practical problems to contend with. Later, in June 2009, Jetstar came under attack in parliament when government MP Paul Gibson lambasted the airline for blaming the cancellation of half-empty flights on mechanical problems. Mr Gibson, furious after six friends travelling to Sydney for a State of Origin match almost missed the game, told parliament: ‘If Jetstar has to cancel so many flights because of mechanical problems, one has got to ask the question, should they be in the air in the first place?’18 Jetstar quickly issued a statement saying that flights that could not be filled were sometimes cancelled for scheduling reasons, but never for maintenance problems.
Earlier that month, a Qantas Airbus