Alan Joyce: "the worst is over" for Qantas

By David Flynn, August 28 2014

Qantas CEO Alan Joyce says that the airline's darkest days are now behind it, despite a shock paper loss of some $2.8 billion dollars over the 2013-2014 financial year.

That figure, inflated by an unprecedented $2.6 billion write-down of the Qantas International fleet, conceals what the airline' considers a more manageable underlying loss of $646 million.

"There’s no doubt that today’s numbers are confronting" Joyce admitted. "But they represent the year that is past, and we have now come through the worst... we are already emerging as a leaner, more focused, and sustainable Qantas Group."

"We still have more to do, but we have come through the worst and we have clear evidence of a brighter future."

Barring unforeseen headwinds – which are unfortunately more the rule than the exception in the airline industry – Joyce said that he expects to see Qantas "deliver an underlying profit before tax in the first half of the (2015) year."

In calendar terms, that's the second half of this year.

Joyce harkened back to "the cumulative effect of two years of market capacity growth outstripping demand" as part of the reason for Qantas' dismal results.

"Clear and significant easing of both international and domestic capacity growth, which will stabilise the operating environment," is the light at the end of the tunnel for Joyce, who expects "a rapid improvement in the Group’s financial performance in financial year 2015."

"Over the coming year we anticipate continuing high competitive intensity," Joyce admits, "but capacity growth is clearly and significantly easing in both the domestic and international markets."

Underlining Joyce's optimism is a remarkably clear mission: "Everything we are doing is about building a sustainable premium airline model for the 21st century". 

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David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

28 Aug 2014

Total posts 23

I seriously read the headline as "Alan Joyce; "The Worst CEO ever""

Qantas - Qantas Frequent Flyer

10 Jan 2013

Total posts 715

It is still possible to find exceptional service on Qantas, although this is down to individual employees who keep the passion in spite of Joyce's mismanagement. This "wunderkid" has earned $22.2 million as chief executive and in the 2012-13 financial year his $5.1 million package matched the combined salaries of the Cathay, Singapore and Air New Zealand chiefs - crazy given shareholder and stakeholder value has decreased inversely proportional to rises in Joyce's pay packet. Qantas shares today are worth 40 per cent less than when Joyce took over, as Joyce took the CEO helm at a time when Qantas was making record profits ($969 million profit in 2008), something he never got anywhere near to. There just doesn't seem any upside to keeping Joyce on, for anyone.

Singapore Airlines - KrisFlyer

14 Jan 2014

Total posts 285

That is shocking!!! (The whole pay packet comparison)

undertheradar Banned
undertheradar Banned

28 Oct 2011

Total posts 662

I know most on here..and other forums have already hung,drawn and quartered QF and AJ..but I am looking forward to the next result (Dec 2014), as I do (also) think that this result is truely the bottom, and the next result will be either a positive one or a not so negative one (ie the curve is on its way up)...I will continue to support and fly QF.

Qantas - Qantas Frequent Flyer

20 Sep 2013

Total posts 469

Did he not utter the same words some three years ago and look what we got.Radar dont look ahead, look forward and believe.

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

Some of us can no longer support QFi because they no longer offer a service where we are based.

QF

11 Jul 2014

Total posts 296

It's a sad day when we move away from an iconic Australian brand, because they make us not because we want too.

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

AJ says  "Everything we are doing is about building a sustainable premium airline model for the 21stcentury".


14 years in to the 21st Centuary? So he's on the ball there the and as sharp as a tack.

QF

11 Jul 2014

Total posts 296

Remember he is a very smart accountant

28 Aug 2014

Total posts 4

The real question here is: Is Alan Joyce David Moyes in disguise?

11 Mar 2012

Total posts 293

Has he quit? 

QF Plat

14 Jul 2014

Total posts 19

Please really, the thing Joyce doesn't realise is that people who fly a lot domestically are the most astute business people in Australia. It's like trying to sell a heater to the Eskimos and telling them it would melt the ice. All he has done is saved himself till the 2016 result comes out, of course 2015 will be ok.

Qantas - Qantas Frequent Flyer

05 Feb 2013

Total posts 54

The market expected a bad result. Qantas has decided to give them one. Some aircraft write-downs were inevitable, and as there weren't many results expectatations to live up to, they've taken as large a write-down as they can. That has the benefit of reducing depriciation costs in future years, and improves the chances they can present results next year as showing a turnaround.

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

"Alan Joyce: "the worst is over" for Qantas"


no it isn't Joyce, you are still at the helm and instructing others to go about rearranging the deck chairs. Depart, I say; and let us have done with you. In the name of Godgo.

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

Alan Joyce is delusional if he honestly believes that Qantas will be back in the black by the end of 2014. Mr Joyce, let's face some facts. You left Aer Lingus fighting for survival when you left.  You have destroyed what was once a proud Australian & international icon. You have have sacked several thousand people from the bottom up rather than from the top down. You have mismanaged airline funds , you have failed to reinvest. You have broken aircraft leases, Qantas now have 1 of the oldest aircraft fleets in the word, the airline has not paid a single dividend to investors for nearly 10 yrs, & it's now TWICE  been reduced to total JUNK STATUS by Standard & Poors & MOODY'S credit agencies, as both of these organisations have no confidence in the airline trading out of financial difficulties any time soon. Your board appear to be totally inept, incapable of running a major organisation, & if anyything the entire QANTAS Board are way out of their depth in relation to saving this airline fron what will soon be  the only  solution. BANKRUPTCY! While ever you are at the helm of Qantas Mr Joyce, unfortunately this airline will continue to bleed $5 million a day , $35 million a wk or $140 million a month ! Time for you to go Mr Joyce, give this to someone that has far better management experience, far better communications skills, someone who has extensive experience within the airline industry. Australia can't afford to lose another 30,000 jobs with the winding up of Qantas , & Australia can't afford to pay you the outrages wages to destroy an airline!

QF

11 Jul 2014

Total posts 296

Here Here

12 Jun 2013

Total posts 744

I can understand Yanks getting "Hear, hear" wrong, because it's not typically said in their own parliament, but how can someone be born and raised in Australia and still get this one wrong?

Hugo, are you stalking UpUpAndAway? How do you know he was born and raised in Australia?

VV
VV

Qantas - Qantas Frequent Flyer

07 Jul 2013

Total posts 12

Assumption, he may be right or wrong, but this site is called "Australian Business Traveller" after all.

QF

11 Jul 2014

Total posts 296

Sorry Hugo my bush humour, I was calling the dogs off, but on saying that I do agree with the comments.

28 Aug 2014

Total posts 2

 

Yesterday, Air New Zealand posted an annual profit of NZ$262 million - a 45 per cent increase on the previous year - and said it will also pay a special dividend to shareholders, costing the airline $100 million.

 

QFF Gold QC gold

26 Nov 2012

Total posts 56

Air New Zealand who has little or no domestic competition, was saved by NZ govt with fleet write offs and capital to invest, all staff contracts renegotiated and still govt owned.

28 Aug 2014

Total posts 2

Air NZ makes a profit on its international and cargo routes as well as domestic. While the govt bail out 12 years ago gave air NZ a leg up, I suggest it has more to do with customer service, astute management and innovation since. Those staff on negotiated wages are now receiving bonuses because of its profit regardless of who owns it.

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

Makes you wonder why Qantas is unable to do the same, particularly as the ASX is on a high at the moment & several other companies are also paying dividends or extra dividends to their shareholders. Why has this airline been allowed to continue in this mess for so long?

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

Makes you wonder why Qantas is unable to do the same, particularly as the ASX is on a high at the moment & several other companies are also paying dividends or extra dividends to their shareholders. Why has this airline been allowed to continue in this mess for so long?

17 Jul 2014

Total posts 3

I very much doubt "the worst is over." Being a very frequent flyer domestically, the drop in Qantas service has been quite dramatic just in the last 3-5 years.

Although Virgin's service isn't a whole lot better, I flew them for the first time in 3 years a few weeks ago and was impressed. Although the staff were just okay, the plane was fresh out of the factory, this was the same with the return flight.

Meanwhile at Qantas, the cabins are in dire need of a renovation and staff morale is just embarrassingly low. A change in management would at least provide some spring in the step for the many employees, as they'd at least have a mere hope of an improvement in the airline's fortunes. 

_bj
_bj

20 Jun 2014

Total posts 8

Oh ... God ... the cabins. My company forced me onto a near-empty Qantas 767 SYD-MEL last week after I've been enjoying the VA shuttle back-and-forth - the compariative horror of the cabin's interior made me shudder.

"Hi, Qantas - this is 1989, we'd like our cabin interior back, thanks."

Qantas - Qantas Frequent Flyer

10 May 2014

Total posts 20

The 737 cabins, OMG are so inconsistent. If Qantas are a so called, "Premium Airline", then why do half  the 737s' have IFE and half don't? As well charging $6 for a small bit of wine. You really start to get the sense if you're in economy that you are flying Jetstar. I really can see why some people are saying Joyce is running Qantas to the ground and Jetstar will be Australia's National Airline.

Does Qantas really think, that putting me on a codeshare flight with 3K, is supposed to elumenate a "Premium Airline Experience"? 

Anyhow I hope, QF is changing for the better. 

02 Jan 2013

Total posts 142

Any chance QF can employ Rob Fyfe as their CEO (former CEO of ANZ) from CBA? Despite the poor performance of Qantas and radical increase of performace from ANZ over the last decade (with the help of the government) , you'd be stupid not to chase this guy.....if at all it was possible!

Virgin Australia - Velocity Rewards

19 Feb 2014

Total posts 451

The worst is over when the 747s and 767s are retired and prevented from eating into the coffers with their fuel bills.

Qantas - Qantas Frequent Flyer

28 Aug 2014

Total posts 1

Qantas should cease trying to compete  as a cut price airline re economy class on its international routes .First,Business and premium economy should be the go.Take the lead and let the rest follow.If passengers want to travel in cattle class on long haul routes then spin them off to other airlines. Get out their with a big advertising campaign displaying the benefits of paying a decent fare for quality service and a quality flying experience.Make some money  and get on with it. By having the majority of the  space seating premium economy should ensure a fare price for a good comfortable seat  and good service. Let singapore follow that lead!!!

12 Dec 2012

Total posts 938

The worst is not over as long as the current board remains in place. They have always blamed everyone except themselves and refuse to take responablity for their actions.

Replace the board and Qantas might improve. Give Tom Horton a 457 visa and make him QF Group CEO.

Heck, I'm sure I could do a better job then Alan Joyce.

Qantas - Qantas Frequent Flyer

25 Jan 2013

Total posts 246

Wasn't Tom Horton the American Airlines CEO and OneWorld chief who led his airline to Chapter 11 bankrupcy in the last few months?

12 Dec 2012

Total posts 938

No, Tom Horton was made AA CEO when they entered Chapter 11. He turned AA around until Doug Packer got in underneath and took over.

Gerard Arpey lead AA into bankrupcy, Tom Horton repaired the damage.

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

Probably wouldn't hurt to have a Senate enquiry. This would give the government a full insight into how Qantas have mismanaged their  entire fleet ,assets, cash & handling of the situation. A good way to put Alan Joyce into their sights & get him to show cause why legal action should not commence against him or the current board over the issue. All CEO's should be held more accountable , particularly in a case such as this.

As far as I'm concerned Mr Joyce is Virgin Australia's greatest asset. Make no mistake, QANTAS have cocked up their direction for many years, especially under Mr Strong & Mr Dixon.  Search for & read The Men Who Killed QANTAS.

On what basis are journalists taking his word that "the worst is over"?

What evidence is there to suggest the worst is over?

Can someone explain to me the nature of the write-down and why one might gloss over it despite being "confronting"?

Why was this write-down taken in FY13/14? Was it something to do with splitting the International and Domestic business?

Facts journalist, facts! Give us the facts so that we can make the decisions ourselves and not use editorials as a substitute for facts!

Singapore Airlines - KrisFlyer

26 Jul 2012

Total posts 32

Aeroflot has an average fleet age of 3.9 yrs old!!! IT IS TIME TO GO AJ AND THE ENTIRE BOARD !!!!!

Qantas - Qantas Frequent Flyer

25 Jan 2013

Total posts 246

Sorry to see our national airline in so much strife. The first thing that came to mind was the famous Richard Branson quote: "People often ask me what the easiest way to be a millionaire is. Be a billionaire and then buy an airline."

I will join the chorus of people calling for a board spill and/or CEO resignation. It's not a personal attack on anyone but showing business students that as a leader in corporate Australia, you can deliver a jaw droppingly bad result and still pick up a bonus sets a dangerously destabilising precedent, by showing aspiring leaders that you can do whatever you want with little to know consequence. 

My other opinion is that they should assign teams to manage the biggest issues like lobbying to reform the Qantas Sales Act and HR costs. I admit I'm not the most knowledgeable on the topic, but it appears we seem to want a national airline, but don't want to actually fly it. My thought is, that it should be either nationalised or privatised.

I’d also suggest a better marketing focus on core product attributes such as the value ads like ‘everything is included’, on time performance, safety and customer service. Never understood the fascination with side-shows like the wine club, food magazine, golf community and alike. I can buy wine, play golf and read about food without Qantas and I know that beneath the veil of all this community action, the goal is for them is/should still to get my money in return for airfares.

Just my 250 cents worth.

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

I note with dissapointment that the Federal Government are still supporting Mr Joyce & the remainder of the Qantas Board. This is despite what could amount to one of the most serious cases of corporate misconduct in Australian history. The CEO & his cohorts must be forced to stand down. This could be the difference between Qantas surviving or being bankrupted.

Qantas - Qantas Frequent Flyer

18 Aug 2014

Total posts 76

And what happens if Qantas don't make a profit nex year as AJ was saying?????

Yep he will keep his job again because he has the boards full support!!!!!

What a joke AJ & the board of Qantas.

Qantas - Qantas Frequent Flyer

11 Aug 2014

Total posts 51

Qantas needs to stop enjoying the luxury of flying to six continents, can Sydney-Joberg & Mel-London they would save so much money if they didnt have routes like that.


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