Crash landing: Qantas’ week from hell
Last week at this time, it seemed that Qantas CEO Alan Joyce had overcome his last obstacle before retirement and was getting ready to travel worldwide to promote the company's impressive profits to investors.
Ever since that time, Joyce has quickly and abruptly resigned two months earlier than planned. Moreover, the intense session lasting two hours, where senators interrogated him after summoning him last month, seems insignificant when compared to the chaos that ensued afterwards.
Alan Joyce, the CEO of Qantas, will resign from his position on Wednesday, marking the end of his 15-year tenure at the company.
On August 24, Qantas announced an astonishing $2.47 billion underlying profit for 2023, which was met with great enthusiasm by investors and triggered frustration among critics. Shortly after, Joyce was called to testify before a Senate select committee to discuss the cost of living. The senators were determined to challenge the claims that politicians from both sides have been lenient towards Australia's largest airline.
Shortly after the commotion surrounding the hearing had subsided, the Australian Competition and Consumer Commission (ACCC) announced on Thursday that it had initiated legal proceedings against Qantas in the Federal Court. Additionally, they demanded substantial financial penalties amounting to hundreds of millions of dollars if the airline is found guilty.
Unnamed senior executives at Qantas, who were not permitted to speak openly, stated that the group's leadership was taken by surprise by the announcement. The announcement alleged that Qantas had engaged in deceitful advertising and selling of tickets for over 8000 flights that had already been cancelled, spanning a duration of two weeks.
The investigation by ACCC commenced in the initial months of the previous year, however, it didn't specifically target the termination of flights and the provision of COVID-19 flight credits until the latter half of 2022. Several high-ranking executives at Qantas have stated that the company had no knowledge of being confronted with legal proceedings in the Federal Court until it was served with the lawsuit just recently.
Chairman Richard Goyder mentioned that Joyce initially indicated his plan to resign during a meeting they had over the weekend. This discussion led to an unplanned board meeting that took place at 8:30pm on Monday night.
"Goyder expressed that Alan's decision to leave went against his natural inclinations as he always gives his all and tackles any challenges that come his way."
Joyce connected to the conversation from Qantas’ main office in Mascot. He departed from the premises later that evening, potentially marking his final departure, and failed to show up on Tuesday morning.
"He conveyed his decision to the board, and many of them were stunned – they were completely unaware of this development. Alan demonstrated great proactivity in taking this step; there was no indication that they intended to dismiss him in any way," mentioned a source within the company who is knowledgeable about the situation.
Joyce spent the previous week getting ready to travel abroad this upcoming Friday for a promotional tour across Asia, the United States, and London to engage with investors from various countries.
Goyder has consistently expressed his view that Joyce is the top CEO in the nation and has consistently dismissed objections claiming that the Qantas board should have taken more action.
On Tuesday, he admitted that Joyce's departure had provided a fresh opportunity for the current chief financial officer, Vanessa Hudson, to shape the airline's future. When Hudson was announced as the successor to Alan Joyce in May, she assured investors that things would continue as usual. However, she might now be wishing that they would forget her previous statements.
Hudson informed the employees on Tuesday that it was evident that the company must proceed with the task of rebuilding customer confidence. Despite being abruptly placed in a higher position several months earlier than planned, she expressed her readiness to guide the company towards achieving this objective.
Vanessa Hudson might have to devise a fresh strategy for her role as Qantas CEO.
Joyce was, in numerous aspects, an unexpected tough individual of Australian commerce: a petite, mild-mannered man from Ireland who climbed up the ladder within the airline's hierarchy to head its emerging low-cost subsidiary, Jetstar, in 2003. Subsequently, he was designated as the CEO of the Qantas Group in 2008.
Demands for his resignation were a never-ending aspect of Joyce’s professional life ever since he stopped the Qantas mainline fleet in 2011 in an effort to resolve an ongoing disagreement with unions.
Joyce's remarkable action gained him respect from fellow business associates, yet sparked strong animosity from the trade union movement and a significant portion of the commuting population.
Every year, his astonishingly high salary - hitting a pinnacle of $23.9 million in 2018 - only intensified their wounds.
Throughout the entirety of Joyce's journey, his board members and investors stood firmly behind him, recognizing the eventual financial advantages derived from his stringent expense reductions.
According to Leigh Clifford, the ex-chairman of Qantas, who was Joyce's superior for 11 years, it was advisable for Joyce to leave his position earlier. Clifford believes that if Joyce had stayed until his planned departure, he would have continuously faced criticism and negative comments.
"I believe he effectively managed the company. I am certain that, especially recently, Alan would have made different decisions if given the chance to reconsider, but we all find ourselves in similar circumstances," Clifford expressed.
Clifford mentioned that even though there were people who criticized Joyce's decisions, he implemented essential reductions to Qantas' expenses to enable its competition with state-owned international airlines.
"There is a significant amount of dissatisfaction among people who travel, but the general public who travel would prefer to have improved aircraft, a significantly larger amount of space for their legs, and more affordable options. However, fulfilling all these desires is not always feasible," he expressed. "After he assumed his position, we faced numerous difficulties... Nevertheless, he implemented measures to address the cost framework and enhance Qantas' competitiveness."
The Business Briefing email brings you important news articles, exclusive reports, and professional viewpoints. Subscribe now and receive it every morning from Monday to Friday.
