Tired Excuses Ring Hollow As Qantas Loses Billions

ONE OF THE WORST corporate results in Australian history — a full-year statutory loss of $2.8 billion — caps three years of uninterrupted “restructuring” at Qantas that has spectacularly failed to deliver any benefits; it must also sound the death knell for the tenure of CEO Alan Joyce, whose story is as consistent as the atrocious outcomes recorded on his watch. This much-loved, iconic business deserves better than tired excuses and recurrent spin.

It’s something of an irony that the single largest component driving such a horrendous end of year result — the decision to book $2.6 billion in write downs on aircraft — is one of the few praiseworthy aspects of the announcement made yesterday by Qantas CEO Alan Joyce; if the airline isn’t going to cut its losses on the great (red and) white A380 elephants and onsell or lease them to another airline that might be able to fill them and/or run them at a profit, the next best thing is to accelerate the process of absorbing the capital costs associated with them and get it over and done with.

But for the most part, yesterday’s announcement was like Groundhog Day, and I want to begin my remarks by reacquainting readers with what I had to say on 1 March, when Joyce fronted the media to announce what was a record (but comparatively piddling) half-year loss of $252 million.

Joyce and his method of announcing bad news and/or the imminent birth of “the new Qantas” (or something similarly phrased), with ongoing restructuring and “stripping costs” from Qantas, have become a familiar — and tired — formula; for three years now Joyce has been holding out bad news sweetened with the prospect of a land of milk and honey within sight, and if readers look at the March article and go back through the link in it to something I published the day he grounded the Qantas fleet in October 2011, it will become readily apparent that the story and its tantalisingly close happy ending have remained virtually identical throughout.

But yesterday’s result — even focused purely on the underlying pre-tax loss of $646 million — is unacceptable on any criteria, the depressed state of the global aviation industry notwithstanding, and is inexcusable in the context of a CEO who has now had almost seven years at the helm of Qantas.

In that time, the Flying Kangaroo has gone from posting annual profits of close to a billion dollars to now losing money hand over fist; if we again focus only on the underlying figure it is clear that Qantas’ losses are accelerating once the abnormals and one-offs are discounted, and that the airline in fact lost close to twice as much money in the second half of the financial year as it did in the first. That alone was widely regarded as scandalous at the time.

For all of the cuts that have been made to its cost base on Joyce’s watch — firing staff, terminating parts of its route network, abandoning its “line in the sand” capacity war with rival Virgin, and finally (and belatedly) retiring some of its most antiquated aircraft — Qantas has still proven unable to turn a profit, and despite the little Irishman’s latest solemn assurances that a return to profitability is near, such promises are impossible to take seriously: they have been offered too many times, and for too long.

Almost every division in the Qantas Group went backwards and/or posted hefty losses in the year to June: even supposed low-cost cash cow Jetstar, which lost $116 million, and even the traditional profit machine that is Qantas Domestic, which went backwards by $335 million to post a pre-tax profit of just $30 million.

Qantas International — which the travelling public has been conditioned by Joyce and his spin team to regard as its only seriously weak link — doubled its losses to half a billion dollars in spite of the tough medicine it has already been forced to ingest.

The only exception of consequence was the frequent flyer program (or “Qantas Loyalty,” as the division is now somewhat euphemistically known); this is hardly surprising given Qantas points can be earned on just about anything if you plan what you buy with a bit of forethought, and can be redeemed on just about anything too (my wife and I converted a stack of them to David Jones vouchers and went berserk in the Food Hall in Melbourne earlier this year, stocking the freezers with more than a thousand dollars’ worth of premium, dinner party quality items that kept us supplied for months for absolutely nothing).

Whilst I digress a little in retelling the anecdote, it’s instructive: Qantas makes money from all of those transactions that are embedded in the true value of the points, and “Qantas Loyalty” made a $286 million profit, up 10% from the previous year. Most telling, however, is the fact that once you’re a member of the program, you don’t even have to set foot on a Qantas aircraft at all, if disinclined to do so, in order to play it for everything you can get.

As has become par for the course, Joyce blamed everything for the abysmal result he delivered yesterday: the Australian dollar, the price of oil, the global financial crisis, old aircraft, competition, you name it.

What was glaringly absent, however — despite the ongoing references to job cuts arising from his years-old restructuring effort — was any meaningful attempt to address the fact, as one comment piece observed, that 39% of Qantas’ outgoings are taken up by labour costs: even accounting for the rigidity of the labour market in Australia (for which the ALP should hang its head in shame) and the excessively unionised culture of enterprise bargaining with which the airline continues to saddle itself, that figure is an obscenity.

But nobody should be too perturbed by the horror story announced yesterday; according to Joyce, the airline is “heading in the right direction” and all the benefits from its restructuring activities — that have been repackaged, re-announced, and have been going on for years — will shortly become evident as Qantas emerges from this most difficult period as a “leaner, more focused and sustainable” company.

Joyce’s story, like his excuses for failure, have been wheeled out so many times that no-one ought to believe a word of them. Actions and results are what matter, not artful spin and PR babble.

The one heartening aspect of yesterday’s announcement is that in writing down the value of much of its fleet, Qantas should be in a position (I emphasise, should) to more or less replicate the structural model utilised by Virgin to circumvent foreign ownership restrictions, and should this actually happen it will fortify Qantas far beyond the same set of meaningless promises Joyce has been peddling for at least three years now, and for longer than that if we’re going to dig further back in time than the grounding of the fleet three years ago.

Readers know I love Qantas dearly and I’m very loyal to it, but no friendship is all that authentic if predicated solely on the positive virtues of the friend; the poorer aspects of the relationship can’t be ignored, and in the case of Qantas (and of Alan Joyce and the board he reports to in particular), it has been excruciating to watch what has been done to a once-great airline on their watch in the name of “improving” Qantas.

I reiterate the call I made in March: should he be available and willing to serve, Sir Rod Eddington — a hardened and proven fixer in the global airline community — ought to be offered Joyce’s job, provided with a clean sheet of paper and a big new broom, and given the brief to do whatever he has to do to fix Qantas, and possibly under a new board if shareholders are so inclined.

Joyce and his guarantees, whilst apparently receiving some favourable press and coinciding with a mild improvement yesterday in the Qantas share price, are devoid of any credibility; that assessment is solidly based on the complete emptiness of similar utterances in the past, and the inability or refusal of the Joyce management team to deliver on any of them.

Significantly, a number of timelines nominated by Joyce over the past three years — three years from October 2011 being one of them, which means now — have come and gone with none of the promised outcomes having materialised.

Further reading from the day’s press can be accessed for those who wish to do so here, here, here and here.

I think independent South Australian Senator Nick Xenophon has it about right; his quip that “Alan Joyce is to Qantas what Caligula was to the Roman Empire” pretty much sums it up.

I think the quirky little Irishman should go to Sydney Airport, hop on one of his A380s to London whilst the route still appears on the Qantas network (via Dubai, of course; who’d want to fly through Hong Kong or Singapore?) and catch a connecting flight back to Ireland from Heathrow on Aer Lingus, the airline he began his career at.

Qantas, for so many reasons — logistical necessity, history, brand loyalty — is too important to be weakened to a point of unviability, and arguably already too badly damaged to continue to be the subject of oft-touted schemes that repeatedly promise the world, but invariably leave the airline in progressively worse shape.

Perhaps this time, the Joyce regime really does stand on the cusp of turning a profit at Qantas; or perhaps, as has been the case too many times in the past few years, the imminent sunny future he forecasts will prove to be yet another false dawn.

Simply stated, Joyce has had his go. His stories and excuses and spin no longer cut ice. He has presided over a debacle. And he must be replaced.

The alternative, to the extent it should even be contemplated, would be too expensive to entertain in the name of one more chance to prove himself right: the costs to this country of Qantas collapsing would make yesterday’s numbers look like small change. The risks of Qantas persisting with Alan Joyce are now too substantial to justify.

 

AND ANOTHER THING: With the horrific Qantas result posted yesterday — and with Labor “leader” Bill Shorten throwing accusations around earlier in the week that Prime Minister Tony Abbott is not fit to govern — it’s timely to provide the Shortens of the world with a mirror; to this end, I post here and here articles published in the wake of the March half-year result at Qantas.

There is an almost inexhaustible catalogue of reasons Bill Shorten is unfit to serve as Prime Minister.

Today, they derive from aviation policy; his union-obsessed, anti-business, xenophobic diatribes six months ago and the power-at-all-costs mentality of modern Labor they were infused with neatly illustrate the point.

Tomorrow, it will likely be a different area of focus. As sure as night follows day, Shorten — and his fitness to serve in office — will be found wanting there, too.

As opposition “leader,” Bill Shorten sits in a glass house. It would not be inadvisable for him to refrain from throwing stones.

 

Air Safety: Tokenistic Shorten Dishonours Labor

IT’S ONE THING to be peddling a narrow, outdated agenda laced with the ulterior motives that go with being a poodle of the union movement; it’s something else altogether to propagate wildly conspiratorial, sensationalist nonsense whilst posing as the alternative candidate for the Prime Ministership. Bill Shorten’s performance yesterday, using aviation safety as the latest union attack instrument, is a political embarrassment to the ALP.

If so-called opposition “leader” Bill Shorten is to be taken seriously, then whatever you do, folks, don’t ever hop on an aeroplane outside Australia. That would include Qantas aircraft, to be clear. In fact, you’d better check with the pilot before getting on a domestic flight in Australia, too: if the plane has Rolls Royce engines, for instance, that went for overhaul at the specialist Rolls Royce engine facility in Hong Kong, perhaps you should consider catching a different flight.

I used to think things were bad when Julia Gillard and Kevin Rudd were running the country; Gillard and her cronies used every socially divisive and regressive dirty trick in the book to stir up political hostility to detract from their shockingly incompetent performance. The less said of the contemptibly narcissistic Rudd — for whom this column has amply expressed its utter loathing on both political and personal grounds — the better.

But Bill Shorten — picked right from the outset by your columnist as a political disaster in the making — hasn’t done anything in four months as “leader” to prove that judgement wrong, and in fact, the more he has to say, the more determined he seems to prove me right.

Shorten’s performance in the House of Representatives yesterday beggars belief; nobody in this country is under any illusion that he is anything more than a cat’s paw for the union movement: as we have said previously, the only jobs the ALP is interested in “saving” are unionised jobs, and the only reason Labor cares about even those is that without them, the cosy citadels and fiefdoms of its union puppeteers would collapse.

Even so — and in full consideration of just how charged and politically fraught the issue of Qantas is at present — I think holding up the prospect of dangerously unsafe aviation practices in Australia in what can only be seen as an attempt to terrify people into compliance with the union/Labor position is a step way too far.

The fundamental problem with the union/Labor position on Qantas — that it must remain at least 51% Australian owned to “protect” Australian jobs, a reference to clauses in the Qantas Sale Act that stipulate most of the airline’s maintenance and staffing must be conducted here — is that if the unions succeed, via Shorten, in their aim of protecting all unionised jobs at Qantas (and remembering the unions have already said they will not countenance either wage cuts or freezes to “legally payable” pay increases), the company could well collapse under the weight of its labour bill.

It proves very neatly that the union/Labor attack has nothing to do with the survival of Qantas at all.

But today’s new tack is to suggest that Qantas aeroplanes are only safe because Australian maintenance staff work on them, and this in turn proves just as neatly why Bill Shorten is unelectable as Prime Minister.

Firstly, the very suggestion raises the implicit notion that aeroplanes maintained by non-Australian workers are unsafe: such an idea is xenophobic, distasteful, and hardly conducive to the assistance of the country’s largest operator in arguably the most globally interconnected industry in the world.

Second, it ignores the fact that every commercial passenger aircraft operating in this country will, at various times, require maintenance performed by foreign personnel: the example of the Rolls Royce engine facility in Hong Kong is an excellent one. There are plenty of others. And it should be noted that in such instances, the preferences of airline managements around local or foreign maintenance solutions simply don’t exist.

Third, this concept of unsafe planes presided over by supposedly dangerous maintenance workers overseas is a de facto accusation that every foreign airline in the world isn’t fit to fly with when, quite clearly, that is not the case.

And fourth, the signal this message sends abroad to potential investors and trading partners is that under Labor, a very dim view indeed will be taken of foreigners operating in Australia and providing goods and services to Australian companies.

Again, xenophobia bordering on racism.

It is offensive to suggest that the safety of Australia’s commercial aviation industry would be compromised simply on account of Qantas being permitted to send more of its maintenance load offshore.

And it’s pretty poor form, in a vast country that is as dependent on aviation for transport, communications and freight links as Australia is, to suggest to voters that the whole industry might actually be doomed if those cheap and nasty (and useless) hordes to our north were to ever lay a spanner on a big red and white aeroplane used to fly Australians to other places.

To be frank, holding up the prospect of an inherently unsafe aviation industry unless Labor and the unions get what they want is sinister, threatening, and poses real questions about the fitness to even sit in Parliament of Shorten and his ilk.

Readers might think I’m splitting hairs over a minor point simply to attack Shorten in raising this. I assure you that I’m not.

Very simply, Shorten and his cohorts in the ALP will increasingly say or do anything — irrespective of the cost — to advance the agenda of the union movement and to seek to elevate that agenda above every other consideration at play in this country’s political conversation.

If I had anything to do with the aviation industry anywhere else in the world, I’d be marking Shorten’s outburst in Parliament yesterday down as something to remember; should he ever become Prime Minister, there’s an entire global industry he’s alienated over a few cheap political cracks that will, in likelihood, achieve nothing constructive.

The list of dubious “achievements” that constitute Bill Shorten’s “leadership” of the ALP — and his campaign to secure it — is growing.

Chalk this up as another grubby stunt that will do far more harm than good if Shorten ever finds his way into the Prime Ministership.

 

Another View Of Qantas: Everyone’s To Blame

HOT ON THE HEELS of my column yesterday, suggesting the ALP and the union movement should get over themselves in relation to the pickle Qantas finds itself in, comes a view this morning that everyone — Labor and Liberal governments, the union movement, and Qantas management — has contributed to and exacerbated the ills afflicting the flying kangaroo; it’s a compelling argument, and I can’t dispute any of it.

I’m really only posting this morning to share an article I have read in The Australian; conservative columnist Janet Albrechtsen — who notes it’s 12 years to the day today since Ansett finally hit the ground forever — has penned a piece that makes so much good sense I simply couldn’t not share it with my readers.

Framed against the backdrop of the Ansett demise, Albrechtsen paints a compelling picture of the same mistakes being made now in relation to Qantas as were made all those years ago, and often by the same people (opposition “leader” Bill Shorten, please take note).

It goes without saying that the union movement comes in for the most savage kicking from Albrechtsen, although that’s as it should be; union tactics — combined with the ridiculous pay deals they force on large companies such as Qantas — are, in my view, the single greatest component of the malaise that currently afflicts the national carrier.

Refreshingly, however, others get it in the head too: Qantas management, effectively on a charge of being too gutless to stand up to the unions during collective bargaining sessions. The ALP, for being too busy playing cheap politics, along with displaying all the refined commercial acumen of a burst aircraft tyre. The Howard government, for failing to rectify the absurd anomalies around the foreign ownership restrictions Qantas faces and the fact foreign airlines (such as Virgin) can compete against the Australian carrier on domestic routes. The Keating government, for placing such a ridiculous set of strictures on Qantas in the first place when it was privatised.

And the travelling public doesn’t escape, either: Albrechtsen notes that 75% of departing air traffic from our shores now travels on (foreign) carriers other than Qantas; on one level, this can be seen as a positive of increased competition and consumer choice, but on another is reflective of the punitively high operating costs that ultimately make Qantas one of the most expensive airlines in the world for international travel.

Have a read. Feel free to comment. I’ll be back at some point later on in the day — and, probably, with a change of subject when I resurface.

 

Qantas: Shorten, Labor Should Get Over Themselves

POSTURING by opposition “leader” Bill Shorten and his MPs on the fraught subject of Qantas is aimed squarely at pandering to their mates in the union movement, with a cavalier disregard for the welfare of the airline irrespective of proclamations to the contrary; Shorten and his cohorts might think themselves clever for devising a potential roadblock for the government, but should Qantas fail at any point, the ALP will wear the blame for it.

For a party that likes to accuse the Liberals of acting on “thought bubbles,” the criticism from the ALP that the Abbott government has “spent three months dithering” in relation to what to do about Qantas — and its request for some form of assistance — is a curious one indeed.

Perhaps Labor would have preferred the government to run off, half-cocked, on the first lame-brained tangent it came up with; then again, had Abbott done precisely that, ALP voices would be heard in thunderous unison screaming of recklessness and a dangerous unsuitability to be trusted with the levers of governance in this country.

In other words — if you’re Tony Abbott — you’re damned if you do, and damned if you don’t.

It’s a telling point, because stripping away Labor’s response to the solution the Coalition will try to legislate in an attempt to tool Qantas up to sort itself out, the ALP position amounts to nothing more than a blatant attempt to shore up the bailiwick of its union mates.

It has nothing to do with concern for Qantas: in fact, if Labor had its way, Qantas would collapse.

For those not across the detail of what the Coalition is proposing to do on the question of the difficulties Qantas faces, the short version is: no renationalisation (the Liberals are correct to maintain governments shouldn’t own and/or operate airlines), no debt guarantee (the argument that Virgin, Rex, and indeed any other company in trouble could legitimately make similar claims of the taxpayer is a valid one), and no taking the “easy option” of doing nothing.

Rather, the government will attempt to repeal the section of the Qantas Sale Act that places restrictions around the level of foreign ownership it can take on, alongside reforms that will mandate the retention of Qantas International in majority Australian ownership but allow Qantas Domestic to be as foreign-owned as the market will support: subject to regulatory approvals and the approval of the Foreign Investment Review Board.

In other words, removing the barriers to Qantas being able to operate on exactly the same basis as Virgin does, with its 77% foreign-owned domestic operations the conduit for some $350 million in capital raising it undertook last year — money which, by the way, came from the three state-owned airlines that also own Virgin domestic.

I would have thought this was a fair enough outcome, and a middle path through the options that were on the table that should have been broadly acceptable to all of the stakeholders involved.

Not so, of course, if you’re the ALP.

It seems to matter not that until yesterday, Labor had been making conscientious-style noises — replete with furrowed brows and anxious expressions — about “working with” the government to find “a compromise” over revising the allowable foreign ownership levels for Qantas; confronted with a solid option by the government the ALP has simply reverted to type in attacking it.

Let’s have a look at the latest drivel from Labor over Qantas, and get to the bottom of its objections.

“How on earth do you free an airline by selling it off overseas, by sacking people?” Shorten asks rhetorically, as if drawing attention to some deep and underlying stupidity he is bent on exposing.

Well…at the risk of throwing fuel on Labor’s “slashing pay and conditions” bonfire, allowing Qantas to send some maintenance work to internationally-accredited facilities in other countries might allow it to recoup some of the money its union-orchestrated enterprise bargaining agreements have inflicted on it.

“We say that when it comes to Australian jobs and Qantas’ need to engage a majority of its activity right here in Australia (the Qantas Sale Act is) worthy of support. (It’s) there for a reason,” fumed deputy Labor leader Anthony Albanese.

Whatever the rationale of the Keating government for putting the Qantas Sale Act in place back in 1995, it’s fairly clear Labor’s stout defence of it starts and finishes at its concern to keep union members on the sloshing gravy train they have enjoyed — jeopardising Qantas’ very viability — for far too long.

Shorten — in rationalising Labor’s intention to block the changes to the Qantas Sale Act in the Senate — pompously asserts there is “no way” Labor would be a party to finishing off jobs and aviation in Australia. Yet if the ALP persists with its approach, it is likely to facilitate precisely that.

It all boils down to three inescapable truths, none of which serve Qantas, most of its workers, or the national interest.

1. The only jobs Labor is interested in protecting are union jobs.

2. Labor would prefer an extinct Qantas than one with a long-term future involving a higher proportion of foreign ownership and some of its maintenance done offshore to help it compete internationally.

3. Labor is so blinded by trying to stick its thumbs in Tony Abbott’s eyes that it is incapable of engaging in reasoned and intelligent public debate.

Four, I might add, is the elevation of the union movement above — literally — every other consideration of governance, or aspect of Australian society: expect this theme to be a developing one in the Coalition’s assault against Labor as its term in office progresses; the more this lesson is served up to Labor on the platter of electoral oblivion, the more determined it is to ignore it.

At some point, Labor is going to have to accept the fact that its union buddies have priced their members out of the markets in which they are employed. There is a reason SPC is at risk of collapse as cheap fruit, of comparable quality, can be sourced from places like South Africa for a fraction of the cost SPC produces it for. There is a reason why the car makers are leaving Australia, and it has nothing to do with Tony Abbott: at US $3,900 per car dearer for the likes of Holden and Toyota to make cars in Australia instead of somewhere else — incidentally, the labour cost differential — it was inevitable they would decide to do so, no matter how much protectionist subsidy money were to be thrown at them.

And there is a reason airlines like Emirates and China Southern are expanding at an exponential rate while Qantas is shrinking and haemorrhaging money: the foreigners cost less to run, pure and simple. Like it or not, having licensed aircraft engineers running around earning $180,000 per annum each simply isn’t sustainable — and specious arguments built around “oh, but the base rate is a quarter of that” don’t cut it; if the aeroplane mechanic is being paid $3,550 per week, that’s his cost to Qantas. The so-called “base rate” is an irrelevant red herring, although of course it is — it’s meant to be. The unions have to have something to hang their claims of impoverished members on.

This country needs to be operated for the sole benefit of the trade union movement like it needs the proverbial hole in the head. This latest posturing around Qantas is proof of it.

It does need to be reiterated that until the government announced its proposed changes to the Qantas Sale Act, Labor was making noises about supporting changes to allowable foreign ownership thresholds for Qantas; viewed through that prism, the game — hot air and bullshit to mask its real position of subservience to the unions — is laid bare.

And all the while, Labor’s political objective — to render Australia ungovernable under the Coalition — may appear, on the surface, to be progressing better than it did than the last time Labor tried this stuff in the wake of its defeat in 1996.

This time, however, the fallout is far more likely to boomerang on Labor; any double dissolution election fought on the Coalition’s inability to get anything other than a continuation of Rudd-Gillard-Rudd government policies past the Senate is likely to be lost very badly indeed by the ALP.

As for Clive Palmer — with his eponymous party designed more to cause trouble than to present serious, plausible solutions — it is difficult to believe his opposition amounts to anything other than yet another attempt to “stick it to” the Coalition parties, having flounced out of the Queensland LNP unable to extract what he wanted from it in government.

Palmer, whose position on Qantas is indistinguishable from Labor’s, would do well to remember that with the exception of his electorate of Fairfax (where most of his primary vote was drawn from Labor and the Greens) his party is dependent everywhere else on support siphoned away from the Coalition under the guise of presenting a conservative alternative to the major parties.

No reputable opinion poll has found a groundswell of support for a renationalisation of Qantas, a government guarantee of its debt or simply leaving it to its own devices to see whether it…erm…sinks or swims.

It follows, therefore, that the course of action outlined by Abbott is the only option consistent with public opinion on this issue, and Palmer — like Labor — may end up paying a heavy political price for what is little more than a stunt, but a dangerous one indeed when the long-term viability and survival of Qantas is at stake.

Just like his unlikely bedfellows at the ALP, Palmer and his troublemaking party should get over themselves.

 

Fixing Qantas? Find Out What Rod Eddington Is Doing

INITIAL INSTINCTS to back Qantas on the issues it faces — certainly, where its dealings with unions are concerned — are hard to heed when judged against past events; the song being sung by current Qantas CEO Alan Joyce after announcing a record $252 million half-year loss yesterday is identical to his tune after grounding the airline, only at a cost of 5,000 jobs. Other factors created the quagmire, but Joyce is no answer: he must resign or be dismissed.

Readers will know that this column has been resolutely supportive of Qantas CEO Alan Joyce in the face of unprecedented difficulties and pressures experienced at the Flying Kangaroo, not least the extortionate bill for labour it is saddled with on the back of decades of enterprise bargaining agreements entered into with its unions.

The Red And The Blue continues to be supportive of Qantas as an entity and as a national icon, and its critique of the unions involved with Qantas remains current, topical, and ever relevant.

But in light of the result Joyce himself admitted was unacceptable when announcing it yesterday, it’s obvious that the Joyce regime at Qantas is every bit as much to blame; it’s time for the little Irish fellow to hop on one of his A380s and disappear back to Ireland, and for someone who actually knows how to run an airline properly to be brought in to run Qantas in his place.

We’ll come back to that.

As much as I blame the unions for some of the malaise that afflicts Qantas — basically, everything to do with wage costs that they had and have any input into whatsoever — my only loyalty, in writing about the national carrier, is to Qantas itself: the enduring entity, the historic icon, and the nation’s favourite bird species that finds itself at risk of going the way of the dodo.

I will confess that in light of yesterday’s developments (which my silence on had nothing to do with my business, for once, but illness: something 2,000mg of penicillin each day is fixing) I was initially thinking through how to stoutly defend Joyce and Qantas management in general. Then I reread an article I posted the day Joyce grounded the airline, all the way back in October 2011, and it hit me right between the eyes that yesterday’s excuses and the “plan” articulated by Joyce two and a half years ago are virtually identical.

It in no way exonerates the unions or their “bleed it till it’s dead” approach to wage “negotiations,” but it’s pretty clear Joyce is as much an albatross around the Qantas neck as they are.

Before we get to those regrettable points of commonality, I note that then — as now — the unions were itching to pull on strike action, as unions always are; then, the pretext was a series of co-ordinated and ambit pay claims, which we now know all too well were as unaffordable as I (and others) said they were. Now, it’s over the imminent sacking of 5,000 workers to cut costs, and whilst it’s perhaps impertinent to remind the union that they don’t run Qantas (management does that), those 5,000 jobs are set to become the price to pay for two and a half years of poor or non-existent outcomes since the airline was grounded.

Then: Qantas had recently booked a clear $550 million full year profit for the 2010-11 financial year. Now: the result for the half year — half year — recently concluded was a $252 million loss.

Then: Qantas International was losing (depending on the source of the estimate) between $150 million and $220 million each year. Now: Joyce reported yesterday that Qantas International lost some $262 million for the half year ending 31 December alone.

It can’t be viewed, mind you, that Qantas — minus International — “only” lost $10 million in the half: its traditionally profitable Jetstar division ran at a loss, whilst its cash cow domestic business gave up 75% of its profitability; the frequent flyer program rocketed further into the black which is reassuring, of course, but when the core business of an airline is nudging a billion dollars in losses on an annualised basis, the fundamental problem is dire.

Then: Joyce pointed to the commencement of a process to retire Boeing 747-400s, Boeing 767-300s and the older Boeing 737-400s from the Qantas fleet as a reason for maintenance workers potentially losing their jobs, as newer replacement planes required a fraction of the heavy maintenance. Now: Joyce flagged yesterday, as part of a series of measures to shore up the airline, the retirement of — you guessed it — Boeing 747-400s, Boeing 767-300s and the older Boeing 737-400s from the Qantas fleet.

It’s true some of these planes have been retired in the intervening period, and it’s also true that to retire a plane, there must be something to replace them with. But Joyce is now signalling an overall downsizing in the Qantas fleet (rendering replacement planes something of a moot point), and he has deferred deliveries for a number of types of aircraft that could have accelerated the process and achieved the desired cuts in Qantas’ maintenance and labour budgets.

Joyce has already had at least one major attempt at culling “unprofitable” routes since 2011: an endeavour that clearly failed in its intent.

And whilst these “before and after” snapshots probably sound all too familiar, here are a few other things that have transpired since October 29, 2011.

A putative merger with British Airways was aborted, for reasons that were never adequately (or to my mind, satisfactorily) explained; the resultant airline would have been Australian-controlled and majority owned, headquartered in Sydney, and would have realised enormous efficiencies of scale.

Instead, a codeshare alliance with Emirates was established: an arrangement that serves Emirates well, I’m sure, but under which Qantas A380s still fly half-empty, routes have still been cut, and any traveller not wishing to travel via Dubai to get to Europe has been disenfranchised.

Speaking of Europe, Joyce last year halved the number of services between Australia and London; what was two daily services from each of Melbourne and Sydney is now one, and even those were rumoured to face the chop until as late as Tuesday.

In fact, Qantas — on Joyce’s watch — is fast becoming the airline that doesn’t take you very far at all; with the Johannesburg route to be axed in the latest round of route rationalisations Qantas now flies nowhere in Africa, to one city in South America, three cities in North America, and one in the UK, along with a handful of destinations in Asia and New Zealand. For everything else there’s codeshare via Dubai.

Did it have to be this way? Labour costs are one of the biggest imposts on the Qantas purse, but — like any business — labour is a controllable expense.

Or at least it should be, which is why the agreements brokered with unions are almost criminally negligent in their abrogation of due diligence: the unions don’t care; they simply bleed companies until they collapse under the weight of unreasonable demands (extorted using the very worst tactics imaginable) and then move on in search of fresh industries and companies to infest and infect.

But managements who bargain with unions bargain with the very lifeblood of their enterprises: it’s little wonder the white-collar unions are as strong as they are; generally, it is governments — therefore, the taxpayer — which ultimately funds their largesse.

In business, however, EBAs might save employers (and especially big employers) the bother of investing the time in negotiating individually with their staff. But packed with allowances, penalties, special conditions and loadings on top of an “agreed” base rate — all of which automatically increases and compounds, generally faster than inflation — the end destination on the EBA route is business collapse, as revenue simply fails to cover outgoings. So it is with Qantas, as it has been with the car manufacturers, SPC and others. The unions and their “responsible approach” to such matters be damned.

As for the ongoing problem of the Qantas fleet, Joyce can hardly be blamed for fleet purchases more than a decade ago which have proven foolhardy at best.

I likened the A380s today to someone buying a car: nobody walks into the showroom of, say, Holden, and places an order for a concept vehicle that might be deliverable in five years, but mightn’t appear for ten; the kindest thing that can be said of the A380s is that Qantas couldn’t have known what it was getting. The reality is that it was the wrong aeroplane at a time the B777-200LR and B777-300ER were available and could be supplied within a couple of years. Of the Boeing 787s, three of a total order of 50 have been delivered to Jetstar, and again, the delays on that aircraft are hardly Joyce’s fault.

But by the same token, Alan Joyce has been CEO at Qantas for six years now; it isn’t as if he hasn’t had time to sort through these issues. If the older planes are so expensive to fuel, maintain and run, where are the short-term leasing solutions he might have put in place instead? If the A380 is the dud most aviation watchers have agreed it is — especially for the uses Qantas wanted it for — why have future orders not been switched to B777 orders, and why have existing planes not been onsold or leased to waiting Airbus customers?

In the meantime, Joyce’s pet project — Jetstar Asia — has haemorrhaged hundreds of millions of dollars from the Qantas bottom line for no better return than to turn forewarned Asian competitors into predators in their approach to Qantas’ routes and customers; there are even new planes parked on the tarmac at an Airbus facility in Toulouse that have never carried revenue-paying customers that cost $400,000 per month, per aeroplane, to sit idle as they wait for regulatory approval on a Jetstar Hong Kong venture that may never happen.

All of this — and, to be clear, we could go on for days with other examples — feeds into the kind of horror scenario Alan Joyce presented on behalf of Qantas yesterday. All of it has needlessly cost Qantas billions of dollars that could have been reinvested in its business or distributed to long-suffering shareholders who’ve seen no sign of a dividend on their investment in years. And the buck for it has to stop with the man at the top.

Without divulging the specifics, I’ll share something with readers: my company has a proposal in front of Qantas at the moment; for the cost of less than the annual salary of the lovely girl who is my contact there, I’m able to offer — by way of quality, prime time exposure as a marketing exercise — to put planes with kangaroos on red tails on the TV screens of more than 25 million people each week, for 12 weeks, in 97 countries on four continents. I doubt Qantas will approve the deal. Why? Budget cuts. The numbers Joyce outlined today. Tight margins. Everything being squeezed. I might have a vested interest in this particular activity, but it’s a telling anecdote.

The fact I’m even talking about it (stripped of any meaningful detail as this is) should indicate how little confidence I have in getting the go-ahead; the point is that there’s a lot of money being misspent on Joyce’s watch — on labour, fruitless ambit ventures, and persisting with dead ends — and virtually none for meaningful initiatives that might help grow the airline’s passenger count. If Joyce could point to a track record over the past couple of years of doing what he said he would in 2011 it mightn’t be such an important point. Instead, Joyce has basically promised no more than he did back then, only with 5,000 redundancies to go with it this time.

I’m not going to rip into the Qantas board; that job, should they opt to do so, is the reserve of Qantas’ shareholders.

But I will say this: after six years of failed promises and recycled excuses, it is time for Alan Joyce to go. Voluntarily or otherwise. I think he’s had a reasonable opportunity at the helm of Qantas. It can’t be argued to have been in any way a success, even in conditions that are universally recognised as difficult for aviation globally.

A canny operator would have made a better fist of the realities with which Joyce was faced; a good example is the man he beat for the role — John Borghetti, now running rings around Joyce at Virgin, and able to sustain big losses on account of the foreign shareholders that bankroll them.

On that point, the Qantas Sale Act must be at the minimum overhauled, if not abolished: if, say, 60% foreign ownership were permitted, with foreign airlines limited to 20% “cornerstone” stakes and the airline mandated to remain based and headquartered in Australia — with some relaxation of the level of maintenance required to be undertaken in Australia to allow Qantas to leverage those shareholdings — I’d wager China Southern, Emirates and British Airways would be early favourites to buy: and if they did, Qantas’ problems with capitalisation would largely be remedied.

There would be little need for talk of debt guarantees or renationalisation.

If those in the position to influence such matters are serious about fixing up Qantas, they should perhaps enquire about the availability of the services of Sir Rod Eddington: a proven fixer and aviation specialist with a record of knocking underperforming airlines into shape, if Eddington couldn’t set Qantas right I don’t know who could.

Either way, the funny little Irishman should take the golden parachute, catch the next plane to Heathrow, and grab himself a connection to Dublin: he has had his go, and the price — rightly or wrongly — will be the 5,000 of his employees shortly to be thrown onto the street.

Joyce should be #5,001; the tragedy is that the savings from sacking all those people will help keep Qantas afloat a bit longer, and their departures in that sense are urgently needed now given unions won’t budge on any meaningful cuts to the (mostly usurious) remunerative agreements of their members.

Nobody will ever know if the outcome might have been different, or whether those jobs could have been saved.* But in order to avoid the same announcement of the same number of additional job losses in another couple of years for the same reasons as were given yesterday, it’s time for Alan Joyce to be given the boot.

 

*Not by government handouts. One car industry this lifetime is quite enough without starting up a ready replacement.

 

 

Surely, Qantas Is Better Alive And Shared Than Extinct?

TIME HAS PROVEN the Qantas Sale Act to be a red herring; rather than a protection for an Australian airline in Australian ownership, headquartered and managed in Australia, this well-intentioned but misguided legislative time bomb now threatens to detonate, wiping out the airline and tens of thousands of jobs with it. The cavalier attitude of those able to help is astonishing. Surely a partly foreign-owned Qantas is preferable to an extinct one?

Once again, Qantas is in the news; not for the right reasons, and not (directly) of its own making.

Before we get started I want to make it clear that the renationalisation of Qantas, government guarantees of its debt, and other silliness publicly indulged in by those who should know better are the last things I would ever advocate: maybe, maybe, if it ever came down to Qantas folding or not, there could be a case for the government taking it over, restructuring the living daylights out of it, then privatising it again. But that time is not now, and there remains a number of other options to try before anything so drastic is even contemplated.

I read an article in The Australian yesterday that had me shaking my head, ruling out as it does the prospect of either relaxing or abolishing altogether the provisions of the Qantas Sale Act that prohibit majority foreign ownership of the airline, and place restrictions on the size of the shareholding individual foreign investors are able to take in it.

At the time the Keating government privatised Qantas in 1995, the Qantas Sale Act was in some respects justifiable, if not a textbook case of hypocrisy. That sale followed the privatisation of the Commonwealth Bank, an institution not subjected to the same market-distorting restrictions that Qantas was encumbered with.

But Qantas held (and I contend, still holds) a unique place in the modern Australian psyche, and even those who openly refuse to ever fly on it still confess to feeling some kind of affection when they see Qantas planes on airport tarmacs thousands of miles from home. This is what Keating sought to safeguard: the legend of the flying kangaroo, the spirit of Australia, with its fearsome reputation for safety, reliability, and service. And so dreaded foreigners were prohibited by law from owning more than 49% of it, foreign airlines investing in Qantas no more than 35% in total, and no single foreign investor or entity more than 25%.

Admirable, but utterly misguided.

An early warning of the pointlessness of the Qantas Sale Act came in late 2006, when a quaintly named consortium known as Airline Partners Australia — cleverly structured to comply with the Qantas Sale Act despite a significant shareholding by US private equity funds — narrowly failed to win the required 50% acceptance rate needed for its takeover attempt to succeed, despite carrying the endorsement of the Qantas board of the day. It was widely speculated  at the time that the primary objective of the takeover, had it been successful, was to siphon out about $3 billion in cash Qantas continues to hold on its books even now before disposing of the airline in a fire sale.

(The bulk of the money held as cash by Qantas is to fund accrued workers’ entitlements, just in case anyone thinks it’s crying poor whilst sitting on a war chest).

It showed that compliance with the Qantas Sale Act did not equate to the longevity or prosperity of the airline itself. It would almost certainly have been fatal to Qantas’ business had it proceeded, just 18 months out from a savage global downturn that hit aviation businesses disproportionately hard, and robbing Qantas as it would have of the very liquidity that had made it an attractive target to begin with.

It is instructive to revisit the episode given the supposedly competitive environment Qantas now finds itself operating in. But first, I want — very openly — to kick the anti-union can around a bit, for reasons that will become obvious a little later.

Longstanding readers will recall that back in 2011 when Qantas CEO Alan Joyce grounded the airline in response to militant union bastardry and rampant industrial action over a series of ambit pay demands, I came down in this column very firmly on the side of the airline and its management and against the unions. Most will find such a judgement to be of no surprise. The management, however, happened to be right.

More recently, I shared this little gem, which provides a salutary insight into just how mad, bad and dangerous the unions in this country really are to business and to jobs (and jobs at Qantas especially), despite their grandiose but empty rhetoric about the rights and conditions of the worker: the end destination of this madness is to drive the companies to the wall, and the people they employ onto the scrap heap. So much for constructive workplace relations, union-style.

There are two reasons I bring this up.

Firstly, Qantas — like the car manufacturing companies and a number of other Australian “legacy” brands — has reached a tipping point with its labour costs; simply stated, that point lies where the continuing perpetuation of enterprise bargaining agreements that secure rolling wage rises year in, year out and usually well above the rate of inflation has become unsustainable. It is no secret that in spite of the billions of dollars in taxpayer monies thrown at car makers for years, labour costs lie at the heart of the decisions of Nissan, and Mitsubishi, and Ford, and now Holden to stop making vehicles in this country. And for that, the unions must take their share of the blame.

Qantas, along with Victorian food processing firm SPC Ardmona, seem to be the next cabs off the rank when it comes to this insidious cancer of union-inflicted insolvency and the mortal threat it poses to the viability of those businesses.

But the case of Qantas is different when it comes to the consideration of factors arising from its unionised labour costs; this is the second reason for belting the unions, culpable as they are on this point as well.

The same unions that tried to cripple Qantas in 2011 with ridiculous claims on pay and conditions (but have already done more than enough damage, thanks to the legacy of historical EBAs) strike deals for the same work to be done by an equivalent workforce at Virgin at rates of pay 16% less than they received at Qantas prior to that year’s round of wage claims. As readers will see, this is even more pertinent when it comes to cabin crew, one of whom on a “legacy” agreement at Qantas can earn roughly double what the union-struck deal at Virgin would allow them to.

It not only smells of hypocrisy — nay, stinks of it — but it also points to an agenda within the unions affected of preferment, of trying to set one company up to fail and another as an industry “winner,” which has not only contributed to the unsustainable and unrealistic levels of wages Qantas is forced to shell out, but is an object lesson in why, even with coverage of just 16% of the Australian workforce, the union movement still has far too much influence and clout in this country.

My point is that even before we get to the other factors that have put Qantas in the situation it finds itself struggling to survive in, the odds were already stacked against it by those sections of its workforce represented by trade unions. As I said, this will become important later on.

Now, it seems the pleas from Qantas for the Abbott government to do something to help it will go unheeded, with the article from yesterday’s issue of The Australian showing that deputy Prime Minister Warren Truss has effectively conceded there is nothing it can do on account of the numbers in the Senate — even after the new Senate, friendlier to the government than its present incarnation, is constituted in July.

I don’t think nationalising Qantas is in anyone’s interests: airlines are businesses governments have no place in running, and before anyone starts talking about the likes of Emirates, Qatar, or even Singapore Airlines, it should be noted that these and others like them are mostly countries ruled by one-party states and/or dictatorships, and far from primarily serving a commercial purpose, their airlines also fulfil political functions that can also become military functions under certain circumstances as well.

Either way — and certainly when it comes to the likes of the Middle Eastern carriers, and perhaps some of the Chinese airlines now expanding rapidly — their airlines seek to eke out market share to the destruction of other airlines, not to co-exist with them.

I think the Rudd government made the gravest mistake back in 2009, when it made what was basically a politically motivated decision to block a proposed merger of Qantas with British Airways. The resulting entity would have been majority-owned by Australian interests, controlled by Qantas, based in Sydney, and run by a management populated with a majority of Australian personnel. Qantas and British Airways would have continued to operate as separate brands within a common ownership structure.

But it would also have been a truly global business: and in the modern world of aviation, scalable businesses are the ultimate objective for an industry beset by rising costs and in an environment where travellers want service and standards of safety, certainly — but on a cost-effective basis, which also means lower fares overall.

This is the reason the larger state-run carriers are almost predatory in their expansion plans. It is also why, for example, airlines in the US that are already huge in their own right, such as United and Continental, are merging to form mega-airlines. It is all about scale.

In the aftermath of the Rudd government decision, BA merged instead with Iberia, and later divested itself of its stake in Qantas. And now, the chickens come home to roost.

Qantas competitor Virgin has got around the requirements for 51% of its international operations to be Australian-owned very easily: excluding its piecemeal business to New Zealand and the Pacific Islands, Virgin operates just five (5) truly long-haul aircraft, the 777-300ERs I still contend Qantas should have bought, and flies them to Fiji and the USA. For everything else it has built a so-called “virtual airline” based on codeshares with other airlines (Singapore Airlines, Air New Zealand and Etihad chief among them) to provide its customers with access to a route network of international destinations.

Virgin’s domestic airline business — operated by a separate legal entity to its 777s — faces no restrictions on foreign ownership; it just happens to be 77% owned by — you guessed it — Singapore Airlines, Air New Zealand, and Etihad.

Like Qantas, Virgin also lost several hundred million dollars last year, but unlike Qantas, it was able to undertake a capital raising exercise, reaping some $350 million in cash, from its foreign owners.

In other words (and given the bottomless pockets at SIA and Etihad), Virgin has one huge competitive advantage over Qantas in terms of labour costs. It has a second in terms of ready and limitless access to cash, courtesy of its ownership structure.

And it goes without saying, to put it bluntly, that Virgin is a foreign airline operating in Australia on domestic and international routes.

Unable to compete on the same basis and with one wing effectively hooked behind its famous tail, it doesn’t take an economics professor to see that Qantas is boxed in. Unless someone kicks one of the walls out, the building will collapse, crushing the airline as it does.

I don’t know if repealing the Qantas Sale Act will enable the airline to fight its way back onto a competitive footing or not; I really don’t. But it seems logical that as that Act places Qantas at a severe competitive disadvantage to Virgin that is slowly suffocating it, that disadvantage should be removed.

The alternative — perhaps not now, perhaps not in the next two or three years, but certainly in the foreseeable future — is for Qantas to collapse.

It is locked in a battle for domestic market share with Virgin that it can neither win without access to investor capital, yet cannot cease to fight: Qantas’ domestic business is highly profitable, for now, and built on decades of loyalty from high-yield customers. But Virgin will continue to be unrelenting in adding capacity (extra plane seats in layman’s terms) into the domestic market to push Qantas to breaking point, funded by foreign interests, and when Qantas’ domestic business breaks, that’s it: the international arm of Qantas is already haemorrhaging red ink and has done for years. There is nothing left to prop the edifice up if its strongest turret is destroyed. The whole thing will come crashing down.

Game over.

Those disinclined to repeal the Qantas Sale Act (or to support its abolition) should carefully consider what the collapse of Qantas would mean.

The foreigners who own Virgin will be disinclined to keep air travel for Australians affordable in a monopoly market, and even if such a scenario generated a terrific surge of public anger, it would take months — if not years — for a viable competitor to be planned, established, and then grown to the point it represented any meaningful replacement for Qantas or any realistic sort of threat to Virgin’s market position.

In turn, the economic damage would be incalculable.

Qantas and its subsidiaries operate roughly four times the number of aircraft Virgin does; it services the travel requirements of an exponentially wider number of locations across the country than Virgin, and its importance to Australia’s economy cannot be understated. Travel, tourism, freight, communications and other logistics are heavily reliant on Qantas continuing to operate, irrespective of whatever Virgin does, and once the breach exists it will take many years for any competitor to fill.

I’m loyal to Qantas but I’m no sycophant; it’s done many great things over many years, but it has made its mistakes too. Nobody would deny that.

But the gross errors that were Airline Partners Australia and the Rudd government’s torpedoing of the Qantas-BA merger were, for different reasons, mistakes that could have been terminal for Qantas: the first for breaking it up and selling it for the higher value of its parts, if that had been the end result. The latter might have wrecked the opportunity for Qantas to secure its long-term survival. That could well still be the final result of that incompetent, stupid, ideologically driven Labor Party decision.

Very simply, what is worse: a Qantas owned by offshore investors, subject to some stringently legislated conditions such as being headquartered in Australia, managed by Australians, and mandated by law in areas such as the standard of maintenance its planes receive — wherever that occurs?

To say nothing of the bulk of its workforce remaining employed, and a cherished Australian icon enjoying a stable, secure, long-term future.

Or a Qantas forced to close, when the pressures of an uncompetitive commercial environment and a labour movement hellbent on driving it out of existence finally succeed in doing so?

If you’re still not convinced that abolishing the Qantas Sale Act is the right thing to do, then consider this.

Whether you like or hate Qantas CEO Alan Joyce, and irrespective of what you might think of the merits or otherwise of the management regime he is pursuing at Qantas, his grounding of the Qantas fleet in 2011 was a masterstroke: had he not done so, shutting off the right of the Qantas unions to engage in industrial activity over wages for three years, the higher wage outcomes the unions would probably have extracted from Qantas management at that time — in light of what we now know of the airline’s predicament — could well have already put Qantas out of business by now.

Just remember, the three-year prohibition on the unions taking aim at Qantas, in yet another round of thuggery and bastardry designed to extract yet more extortionate pay rises, expires in October.

If all hell breaks loose at that time, the consequences for Qantas, quite literally, could be anything.

In fact, it could get very ugly indeed.

Qantas Sale Act: Smash The Unions, Save The Airline

THE REACTION from unions to news that Prime Minister Tony Abbott is open to relaxing or abolishing the Qantas Sale Act gives the game away; the unions have sucked Qantas dry with their bargaining agreements and their thuggery, and their existential fear is palpable. There are worthier considerations here than union sensitivities.

It’s an open secret — and not least by its own admission — that there’s a fair bit wrong at Qantas at present; we will in due course get into those issues a little more deeply, but at least one thing has become abundantly clear today.

Prime Minister Tony Abbott — in signalling he is open to putting options on the table to the extent the government can do so to assist Qantas — has elicited a revealing (if predictable) reaction from union figures, who rightly perceive their sinecures and feathered nests will be the price of Qantas’ long-term survival.

Abbott has indicated he is sympathetic to the arguments advanced by Qantas that it operates at a significant competitive disadvantage to its (largely state-owned) foreign competitors, and to local competitor Virgin, which does not face the kind of barriers to capital raising imposed on Qantas by the strictures of the Qantas Sale Act.

The prospect of foreign ownership controls being abolished in relation to Qantas has sent union types into a frenzy, and so it should; such a move would signal the beginning of the end of their once-proud movement in this country.

And this, quite frankly, is as should be.

Opening Qantas to foreign investment to provide it with the liquid capital it needs to overhaul its organisation, retire liabilities and scale back its workforce will inevitably lead — as the unions foretell in their fit of pique — to some sections of its workforce being significantly downsized and/or moved offshore to help the airline improve its balance sheet and to enable it to compete more effectively on an international basis.

If the unions want to blame anyone for this, they ought, collectively, to invest in a mirror.

Opposition “leader” Bill Shorten — himself a former union boss at the AWU — has led the charge, saying the airline’s skilled maintenance workforce of 5,000 was at risk if foreign ownership restrictions were lifted. It is necessary to look only as far as the thuggery and bastardry the unions deployed toward Qantas in 2011, along with the ridiculous ambit pay demands they pursued for months, resulting in the grounding of the airline for three days, to understand why.

For the same reason, Transport Workers Union national secretary Tony Sheldon hit the nail just as crisply on the head when he suggested that any restructure of Qantas could lead to more jobs being outsourced to Asia.

The problem is that far from achieving its stated objective of maintaining Qantas as a majority owned Australian airline based and headquartered in Australia, the Qantas Sale Act — like the extortionate Enterprise Bargaining Agreements struck with car manufacturers — has been a cloak for the union movement to hide behind, and to drive up real wages for its workers to the point no company employing Australian union labour can compete internationally or sustain the expense beyond the short to medium term.

Qantas is a very different beast to the car makers, who can shut up shop in Australia and “run home to mama” so to speak; if Qantas goes out of business, Qantas goes out of business. Someone might pick up the pieces and breathe new life into them, but they wouldn’t operate it as “Qantas,” and they certainly wouldn’t allow themselves to be bent over in the manner unions like the TWU and the AWU expect.

It’s truly regrettable that Australian companies should be put in this position at the hands of Australian people purporting to act in the best interests of their Australian stakeholders, but that’s what the trade union movement has managed to do.

I read an article in one of the metropolitan news portals that listed out some of the companies in which EBAs have either pushed them close to the wall or are soon enough expected to do so: Holden, Toyota, Qantas, SPC, Simplot, and a raft of others — all iconic Australian brands that nobody wants to see disappear or fail.

The decision by the Federal Court this week to refuse Toyota workers a vote on modifying their EBA in the wake of developments at Holden — on the basis that even such a vote would breach the Fair Work Act — should send a shudder through any organisation that has entered into an EBA with union labour; those agreements will have to run their course, which in some cases will take years, and for some companies there isn’t that much time left on the clock.

Far from achieving lasting and beneficial outcomes for its members in terms of improved conditions at work and real wage increases that outstrip those in the private sector by x%, the union movement in Australia has become a long-term destroyer of companies, jobs, livelihoods and ultimately the living standards of the very Australians it claims to protect.

But cut the pay of its workers to keep them in a job, and perhaps restore their employers’ businesses to profitability? Not on your life.

Not bad for a movement that brags that it improves outcomes for people.

It needn’t have been like this, of course. But the capacity for large employers to continue to foot recurrent, compounding wage increases, above the cost of living and for workforces already remunerated well above the average measures of income in this country, is not infinite.

Qantas — as GM has shown this week — is not the first company to confront this reality and alas, it won’t be the last in the foreseeable future.

The simple fact is that the shrinking coverage of the Australian workforce unions now boast has led to the ultimate rearguard movement: keep the wages pressure ratcheted up as high as possible in the diminishing number of companies they operate in; and keep the sinecures for the union secretaries, and executives, and organisers, and everyone else on the gravy train as comfortable as possible for as long as they can.

Ultimately, today’s union movement is enjoying its comforts off the back of the jobs of tomorrow’s Australian workers: and far from being “Union and Proud” it should be regarded as a national disgrace.

I, too, don’t like the idea of a foreign-owned Qantas and like anyone else, I don’t exactly relish the idea of some of its jobs being relocated to Asia where the labour costs are cheaper.

But at the end of the day, if it’s a choice between the airline surviving in a slightly different form or being driven out of existence altogether as the end result of the unions’ agenda, I’ll choose the survival of the airline — and bugger the unions.

The irony is that the abolition of the Qantas Sale Act would potentially provide opportunities for the unions: for one thing, the legislative changes may be accompanied by legally binding regulations enforcing minimum benchmarks on maintenance standards and compliance that would open obvious avenues for the movement to contribute more constructively.

For another, the most qualified people to work on Australian aircraft are obviously the people who have always worked on them: and a job remunerated at a lower rate in Malaysia or Singapore or Hong Kong could still provide a handy living for aircraft maintenance staff who chose to move — to say nothing of intangible benefits such as travel opportunities, experience of other cultures, and so forth.

But the unions won’t have a bar of this: it’s their way or the highway, and if that means wrecking a company because it runs out of cash to pay their blackmail cheques then that’s a price the union movement will wear with pride.

If changing or abolishing the Qantas Sale Act enables that company to adapt to international conditions in the modern aviation industry, and to survive as a long-term Australian icon, then it should be changed.

And if that means robbing the unions of yet another closed citadel in which the excesses of the few trump the greater good, then the unions must be ignored: even if, in an “ideal” world, it might be different.