Qantas faces bitter battle

The airline axed a marketing deal because of an alleged conflict of interest with the former chief. Photo / Bloomberg

Tourism deal axed as group of rebel investors push for change in strategy.

Qantas and a group of rebel investors appear to be bunkering down for a long, dogged struggle over the future of Australia's troubled airline.

The tensions between chief executive Alan Joyce and his predecessor Geoff Dixon will continue following the airline's decision to dump its A$44 million ($56 million) marketing partnership with Tourism Australia.

Joyce axed the deal, due to expire in June, because of an alleged conflict of interest between Dixon's roles as head of the tourism body and his part in a group of investors seeking to change the Qantas strategy.

"Qantas cannot continue to collaborate with an agency whose chairman is a member of a syndicate committed to unravelling Qantas' structure and direction," the airline said.

Although Qantas has promised to hand residual funding to state marketers, the nation's tourism industry has become collateral damage in the war between the two men.

Joyce succeeded Dixon as Qantas chief executive as the global aviation industry began a nosedive that took the Australian airline down with it.

Its share price has fallen from about A$6 in late 2007 to around A$1.30 and its international operations have been in steady decline, posting an A$450 million loss for the division in 2011-12.

The airline lost A$245 million against the previous year's net profit of A$250 million.

Joyce has been positioning Qantas for an improvement in the global market, with the International Air Transport Association predicting net profits to rise from this year's 0.6 per cent to 1.1 per cent in 2013.

He has hauled back orders for new aircraft, cut the workforce, dumped unprofitable routes and planned a new alliance with Emirates.

Joyce has been unrepentant and claims to have the backing of the majority of shareholders, including 98 per cent support for the planned Emirates alliance.

But a small group of powerful investors is trying to gain sufficient support from other shareholders to force Joyce to change tack.

Members of the consortium, including Dixon, had been involved in a failed A$10 billion bid to take control of the airline before the global financial crisis struck.

The group includes venture capitalist Mark Carnegie, retailing chief Geoff Harvey, former Qantas chief financial officer Peter Gregg and advertising magnate John Singleton.

They hold up to 2 per cent of Qantas. Analysts say they would need the backing of 20 per cent to obtain a seat on the board.