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As Virgin Australia was on the verge of falling off the Covid-19 as the birds were on the verge of falling, Qantas Airways chief executive Alan Joyce warned the airline of the rescue. The government should not select “winners and losers” by rescuing “mismanaged” companies.
Then Canberra rejected Virginena request In order to get a $ 1.4 million loan and within a few weeks Qantas ’main rival entered the administration, the process lost 4,000 jobs and greatly reduced the capacity of the new owner of Bain Capital.
Since then Qantas has taken a more positive approach to financial aid and rubbed FT estimates that taxpayers funded up to $ 2 billion through Covid-19 schemes. This has kept the planes afloat during the pandemic.
Unlike the governments of France, Germany and New Zealand, Canberra has decided to take its own stake in its national carrier or not impose strict conditions on the rescue of cash. Unions and rivals Qantas are now crying over Rex, the regional airline, brand The scheme to support Canberra’s aircraft is the “Qantas package”.
“Qantas is now very disappointed, ready to risk universal ridicule, to get more money at any price,” said John Sharp, Rex’s chief executive. Joyce pulled back comparing Rex with a black knight Monty Python state Holy Grail, who lost his limbs in a fight on a wooden board.
The conflict reflects Rex’s concern that the so-called “flying kangaroo” is overflowing with flights to disrupt regional routes to the market – he has made a claim in a complaint to competition authorities.
But it also raises questions about the Conservative government’s overall aircraft support programs worth more than $ 2.5 billion.
“The Australian government would have been more sensible if it had taken a stake in Qantas in exchange for all the rescue money,” says Greg Bamber, a professor at Monash Business School. “That means taxpayers can reap the return on investment when the market improves… And insist on reasonable terms.”
Bamber says the conditions could be a ban on the payment of large bonuses to Qantasi shareholders and senior executives while reducing the number of employees and outsourcing functions. He says they can help dominate Qantas ’tough short-term competition tactics against Virgin and Rex’s smallest rivals, which are detrimental to long-term customers.
Covid-19 is not the first crisis in Joyce’s tenure. Qantas reported a record, net loss of $ 2.8 million in 2014 after a war of ability to bruise with the Virgin. Airline carried out They cut spending by $ 2 billion and laid off 5,000 employees, which the company earned a year later.
Virgin has never recovered from the power war while Qantas began buying its shares – more than $ 2 billion since 2016. Recoveries made Joyce the highest-paid executive in Australia in 2018 with a salary of $ 24 million in 2018, driven by Qantas ’share-based incentive schemes. .
Canberra says the companies have allocated aircraft aid to the entire industry, rather than focusing on Qantas. He has also specifically ruled out nationalizing companies, preferring to stay commercial operations.
Qantas said the money donated cannot be compared to the bailouts given to other airlines around the world, as it maintains an investment-grade credit rating. reported A profit of $ 1.3 billion before tax in 2019. Most of the money raised has been for stationary workers, an airline spokesman said.
But critics have warned that the Qantas Covid-19 crisis is being used to reduce the number of employees, change employee rights and lay the groundwork for making large payments to directors and shareholders. It is now controls three-quarters of the domestic market, compared to 60% before the pandemic, and facing weakened rivals.
When Covid-19 hit, Qantas cut 6,000 jobs and later unveiled plans to hire 2,500 ground workers. Virgin has taken a prudent strategy and decided not to start a flight to New Zealand as part of Australia’s first international “travel bubble”.
Rex remains a small operator with a market capitalization of $ 155 million, despite plans to grow.
“Joyce has used Covid to kill any real competition by putting its end in the public feed on an unprecedented scale,” says Labor Party Senator Tony Sheldon as he directs parliamentary research on the aviation sector. “This has led to the destruction and subcontracting of thousands of jobs, with dismissals paid by Australian taxpayers.”
jamie.smyth@ft.com
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