Joyce’s steely focus on the carrier’s balance sheet meant that the airline exited the pandemic in good financial health, with Qantas chair Richard Goyder in May praising the former chief for navigating the company through “the most challenging and tumultuous period in the airline’s history”.
In August, Qantas reported a A$2.5 billion ($2.7b) underlying pre-tax profit for the year ending in June and announced a A$500 million share buyback to reward shareholders for their support.
However, customers were fed up with lost bags and cancelled flights as a result of cost-cutting measures introduced by Joyce who was lambasted after describing travellers as “not match fit” last year when there were long queues at airports. He later clarified: “The simple fact is our operational performance hasn’t been up to the standard”.
It is now shareholders who have turned on Qantas as the company has been hit by a series of scandals. The consumer regulator sued the airline in August, accusing it of charging for ghost flights, selling thousands of tickets for flights that had already been cancelled.
Shareholders criticised the ghost flights’ defence offered by the airline, namely its argument that it does not sell a ticket when the customer books a flight but a “bundle of rights”.
Earlier in September, a court ruled that Qantas had illegally sacked 1700 workers during the pandemic, leaving it facing a mammoth compensation bill.
Goyder, who alongside two long-serving board members is standing down this year, described the annual meeting vote as “overwhelming”.
“We hear the message,” he said as investors lined up at the meeting to take potshots at the company. One investor demanded to know if any of the people on stage had travelled economy class on an international Qantas flight in the past year.
Stephen Mayne, a Qantas shareholder and activist investor, said shareholders had been the “bedrock” of support during the Joyce era but the company had now lost that constituency too. “Shareholders were the last to fold, but collectively they are now quite feral and seeking restitution,” he said.
Rachel Waterhouse, chief executive of the Australian Shareholders’ Association, a retail-investor body, said shareholders were “very disappointed” with Qantas and needed to hear how the company would get back on track.
That task has fallen to new chief executive Vanessa Hudson, who has been with the airline for almost three decades and replaced Joyce.
In response to aggrieved shareholders, Hudson said the “customer is now our number one focus” and detailed various plans to refund customers, improve training for staff and improve the standard of food on its long-haul flights.
The damage done to the Qantas brand was evident at the annual meeting when a third of investors voted against the re-election of Todd Sampson, a former advertising executive.
Sampson said he had considered standing down but felt his experience rebuilding brands should come to the fore now. “Our brand and reputation have suffered considerable damage, damage we will repair,” he told shareholders.
The job for Hudson and a new chair and board will be a rapid restoration of the airline’s reputation. They will at least do so from a position of financial strength — with Qantas’ balance sheet bolstered by debt reduction and cost-cutting under Joyce — and in a domestic market where it still commands a market share of more than 60 per cent.
If they fail to turn it around within a year, then they risk further turbulence at next year’s meeting. Australia’s “two strikes” law dictates that investors could push to dissolve the board after a second vote against the company’s executive pay proposal.
Mayne said he was hopeful that Qantas could overcome the turmoil, especially now that Joyce and Goyder had moved on. Investors feel they have had enough “red meat” for now, he said.
Written by: Nic Fildes in Sydney
© Financial Times
