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Few Qantas cuts to be popular, Joyce tells Coalition MPs

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Matt O'Sullivan, Jonathan Swan

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Greens back Qantas support

The Greens say the government should provide assistance to Qantas, but only if the airline promises to protect jobs.

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Qantas boss Alan Joyce has outlined more ''hard decisions'' ahead for the airline as he seeks to carve out $2 billion in costs before making another pitch to the Abbott government for a helping hand.

Over the next two years we will drive it down so that we close the gap between Qantas and its major competitors. 

Alan Joyce

In a closed-door briefing to a large group of Coalition MPs and senators in Canberra, Mr Joyce foreshadowed the magnitude of the extra costs he plans to strip out by emphasising that they will be proportionately greater than those made to American Airlines when it was placed in bankruptcy protection.

Hard decisions ahead: Qantas CEO Alan Joyce.

Hard decisions ahead: Qantas CEO Alan Joyce. Photo: AFR

He told the group, which included Social Services Minister Kevin Andrews, that national airlines ''cannot stand still'', and Qantas would be shifting to a new, accelerated phase of cost cutting.

Mr Joyce will meet Treasurer Joe Hockey and Transport Minister Warren Truss on Thursday in a bid to encourage the government to offer Qantas a debt guarantee. While his pleas have met resistance by senior ministers such as Mr Truss, the Treasurer has been open to making a special case for Qantas.

''Much of Qantas' cost base is a legacy of 48 years of government ownership from 1947 until 1995,'' Mr Joyce told the Coalition politicians on Wednesday night. ''Over the next two years we will drive it down so that we close the gap between Qantas and its major competitors.''

The airline has been at pains to distance itself from Holden and SPC Ardmona, which failed to gain aid from the government.

''Quite obviously, Qantas is not Holden,'' Mr Joyce said.

Qantas announced plans to slash costs and axe at least 1000 jobs when it warned in December that it would slump to a half-year loss of up to $300 million. But the airline is yet to reveal how exactly it plans to slice $2 billion from a business which has undergone deep cost-cutting in recent years.

''There is no doubt that there will be more hard decisions for Qantas over the months to come,'' Mr Joyce told the politicians. ''We will look at all options and consider all steps to strengthen our business. Few of the decisions we make will be popular.''

He is under pressure from investors to reveal a credible way of cutting costs when he unveils Qantas' half-year results on February 27.

Mr Joyce again conceded there was little political appetite for changing the Qantas Sale Act, which limits foreign ownership at 49 per cent.

But in a veiled reference to government assistance, he said there were ''appropriate solutions that would not create precedents and would not come at a cost to taxpayers''.

Qantas has repeatedly declined to publicly reveal what it is seeking.

Mr Joyce made special mention of Mr Hockey, who led the debate about the ''uneven playing field in aviation''.

While a number of senior Coalition MPs want to ''unshackle'' Qantas from some of the foreign ownership restrictions, strategists say a change to the composition of the Senate in July will make little difference, given the opposition of the Greens and Labor.

However, some are worried that if the government does not act soon to amend or scrap the act, the Coalition will be left exposed, and the public will be presented with another Holden or SPC scenario.

''The Qantas Sale Act needs to go,'' said Liberal senator Sean Edwards, who called on Labor to ''get on board''.

''This is a restriction on the management of Qantas, the likes of which no other airline in the world has to suffer.''

But Labor's transport spokesman Anthony Albanese said on Thursday that it would be against the national interest to change the Qantas Sale Act and accused the government of sitting on its hands when it came to helping the national carrier.

''The government is sitting back doing nothing just like they sat back and did nothing about SPC Ardmona or Toyota or Holden,'' he told ABC radio.

Mr Albanese said the opposition would work constructively with the government on any proposal.

''They need to act,'' he said of the government. ''We're talking about 32,000 jobs here directly and we're talking about an iconic Australian company that plays a critical role, not just in our national economy but internationally as well.''

Finance Minister Mathias Cormann said the government was carefully considering calls for assistance from Qantas, saying it was conscious of the restrictions placed on the airline by the Sale Act.

Senator Cormann said businesses needed to ''put their own house in order''.

''Having said that, we're very conscious of the particular challenge that Qantas faces in the context of restrictions imposed on them in the Qantas Sale Act,'' he told ABC Radio on Thursday .

''We are having conversations with them, and we’re carefully considering the propositions they’ve put to us.''

Liberal backbencher Dan Tehan described Mr Joyce's speech as ''sobering''.

''I think most people who in the room readily accepted that they are facing some serious challenges, and that the airline is going to have to take some serious steps to ensure that it is going to be profitable into the future,'' he told ABC Radio.

However, the airline needed to make a public case for government intervention, he said.

''They need to publicly make the case as to how the Qantas Sale Act is holding them back, that it is placing a regulatory straight jacket on them,'' Mr Tehan said.

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184 comments

  • Hopefully he will be trimming the salaries and bonuses at the top..

    No wait he is talking to LNP, so its sack the work force, get them for free on a work for he dole programm, whilst I bet he meets his targets and gets a big bonus this year.

    Commenter
    KS
    Location
    Sydney
    Date and time
    February 13, 2014, 7:00AM
    • Spot on KS - the biggest impediment to Qantas success is Joyce himself and the rest of those clowns on the board with their multi million dollar packages. Absolute disgrace......put an Australian back in the seat.

      Commenter
      Occyman
      Date and time
      February 13, 2014, 8:02AM
    • Exactly. How people cant see this is amazing. Yeah cut wages so normal people cant even feed themselves. God sake.What gets to me is "professionals" bagging unions and normal peoples wages. Are they that self absorbed to think that if everyone elses wages drop that theirs wont eventually drop to.

      Commenter
      BH
      Location
      NSW
      Date and time
      February 13, 2014, 8:05AM
    • This man has been trying to run this company into the ground for years. Lets loose some more jobs, blame the worker and unions and get back to square one again.

      Commenter
      ary pace
      Location
      narrabeen
      Date and time
      February 13, 2014, 8:34AM
    • Maybe buy a few less planes and keep the existing ones going a bit longer its not like a 30 yr old aircraft is unsafe !! Most of the worlds Jumbo fleet are that old !! Qantas is in trouble because Joyce is a poor manager and he should have been replaced a long time ago !!

      Commenter
      BigTedd
      Location
      Brisbane
      Date and time
      February 13, 2014, 8:35AM
    • The Joyce experiment has been a monumental failure. How a leader expects a service industry to shine when he relentlessly attacks his own people is mind boggling.
      Joyce has drawn and quarterd Qantas to no avail which must reflect his decision making. If he were CEO of a bank or mining company he would have been shown the door years ago.

      Commenter
      Danger Ranger
      Date and time
      February 13, 2014, 8:35AM
    • I suggest a new contract for any business expecting a handout by drawing on the public purse. How about any money coming from workers taxes must come attached with a commitment to save jobs – not cut them!! It is insanity from both the right and left of government to keep carrying the can for Qantas while they pay top bonus’s for their management. No conscience or business sense whatsoever. Cutting jobs is only contracting the market even further.

      Commenter
      Paying for the privilege
      Date and time
      February 13, 2014, 8:39AM
    • The biggest problem for Qantas is the fact that the workforce has never lost its public service mentality where there were buckets of public money to fund inflated wages and conditions. This is a very competitive industry that is under threat from overseas airlines that have much lower operating costs. Qantas cannot continue with a business model that pays pilots over $500K a year and ground staff 20% more than competing Australian airlines. Alan Joyce is just trying to bring the airline into a competitive position but the unions seem hell bent on maintaining unrealistic wages and conditions. There is no point in maintaining unrealistic wages and conditions and not have a job like the present Toyota situation.

      Commenter
      peteozi
      Location
      Brisbane
      Date and time
      February 13, 2014, 8:52AM
    • It surely was not worth speaking with the labor when they were in power.. just look at their management ..

      Commenter
      Remove the ownership cap
      Date and time
      February 13, 2014, 8:54AM
    • No a cent of taxpayer dollars should go to QANTAS until either Joyce goes or there is a major cut toi his obscene salary. Surely he cannot continue to justify his current remuneration on the basis of performance! Clearly the board that continues to support Mr Joyce needs to be closely looked at.

      Commenter
      Greg Mc
      Location
      Canberra
      Date and time
      February 13, 2014, 8:56AM

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