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RUBY:

From Schwartz Media, I’m Ruby Jones. This is 7am.

Alan Joyce was once hailed as a saviour of one of Australia’s most beloved icons.

The former CEO of QANTAS was championed by his board and well known in the Australian business community for his support of social justice causes during his 15 years in the job.

So, it’s been a dramatic fall from grace.

Alan Joyce has now left his successors with a reputational mess after a series of bad decisions that left customers furious and he’s had his bonus cut by millions.

Today, reporter Marc Moncrief on what Joyce did wrong and whether his punishment will do anything to rebuild Australia’s trust in QANTAS.

It’s Wednesday, August 21.

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RUBY:

So, Marc, there was this headline in the Daily Mail last week that read “the face of a man who just lost his $9 million bonus”. And there were these photos of Alan Joyce, the former CEO of QANTAS, looking pretty dejected. So can you put that $9 million dollars in perspective for me?

MARC:

I know it's never going to be a great day when you find out you're not getting $9 million that you thought was coming your way, but he's going to be okay. Initially his bonus was going to be worth something like $16 million, and the amount that they brought back is a little bit more than $9 million. I think he made something north of $100 million out of Qantas during his 15 years there. So he does have some money left over in this whole process, and we should keep that in mind. He's not going to go broke anytime soon.

RUBY:

Right. So when did things begin to go wrong for Joyce?

MARC:

So, the place to start really is in May last year. That's when Joyce announced that he was going to be leaving Qantas after 15 years as its chief executive.

And initially, his plan was that he was going to be leaving in November. So we're talking about November of 2023, and he was going to be handing over to Vanessa Hudson, who was at the time the chief financial officer of the company.

That June, he got special permission from the board to sell almost all of his shares in the company. It wasn't too scandalous. It wasn't the sort of thing that nobody ever does. But it does become a little bit more interesting later, this share of sale.

Now in August, two things happen kind of right on top of each other. The first thing that happens is that the company announces its profit for 2023 will be about $2.5 billion, which is the largest profit QANTAS has ever booked.

Audio excerpt — News Host (9 News):

“A record profit for Qantas will put aeroplanes back in the sky.”

Audio excerpt — Finance Reporter:

“$1.43 billion Aussie dollars, that’s about $950 million US, just shy of expectations…”

Audio excerpt — News Reporter:

“A record half-yearly profit, the first the airline has recorded after $7 billion dollars in losses during Covid.”

MARC:

This is coming after a couple of pretty tough years. 2021 and 2022 were not great years for airlines. Prices skyrocketed, staff were cut to the bone. And so this massive profit in 2023, to some, it felt a little bit like a company that was robbing from its workers and its customers to pay out its investors and its executives.

Audio excerpt — Transport Workers Union spokesperson:

“This profit is dirty money. It’s been reaped off the back of exploiting labour hire loopholes, illegally sacking workers, making customers and taxpayers feel ripped off.”

MARC:

Now, the other thing that happens in August is that the Australian Competition and Consumer Commission announces that it's got this suit that it's going to bring in the federal court.

Audio excerpt — News Host (Sky):

“We’ve just had word through, confirmation from the ACCC via a statement, that it has launched legal action in the federal court alleging that QANTAS engaged in false, misleading, and deceptive conduct…”

MARC:

And the suit alleges that QANTAS sold tickets to flights that it had already cancelled when it sold the tickets.

Audio excerpt — News Reporter:

“So, selling tickets on flights that had already been cancelled – 8000 scheduled flights between May and June in 2022, and QANTAS kept on selling them for an average of two weeks after it knew internally that those flights were never gonna leave the ground.”

MARC:

In August in 2023 when this news becomes public, that's the final straw for Joyce. He announces that he's going to bring forth the November departure that he had already planned by two months, and this is when that share sale starts to become interesting to people, because it turns out when he sold those shares, the company already knew that it was under investigation by the ACCC. In retrospect, that share sale looks really bad and feels really bad for other investors because it turns out that that share sale was allowed to happen at a peak in the market.

RUBY:

Okay, so QANTAS’ problems started with the pandemic, but really just got worse over the next few years. Eventually shareholders had enough, and they commissioned a review into what's happening at the company, so tell me about that review.

MARC:

Yeah. So this review really came about after a shareholder revolt when the company announced its last financial results. What it found was that it puts Joyce right at the middle of many problems going on at the airline, and it really blames the board for having put too much faith in Joyce.

Now, Joyce had been there for 15 years. He had been a stalwart at the airline and really a prominent businessman in the Australian landscape. So the review said that QANTAS had a command and control leadership style operating inside of it. A lot of the decision making just highly centralised in Joyce, and that made it difficult for people to speak up whenever bad things were happening.

The review makes 32 recommendations, including changes to executive pay and ways that communications are done with stakeholders. And those are really typical sorts of recommendations that you get whenever these sorts of reviews are conducted. Directors who are on the board, they'll get a 33 per cent cut to their base pay this year. So there are some repercussions that are to be felt at the board level.

But really, the review says that the primary failure was that there was just too much power sitting in Alan Joyce's office.

RUBY:

So, can QANTAS repair its reputation as the national airline? That’s after the break.

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RUBY:

So Marc, QANTAS, it is one of Australia's most iconic companies. But as you say, its reputation has taken several hits over the past few years, and especially in the last 12 months. A review has now placed blame squarely for that on the former CEO, Alan Joyce. So he's left the company with a reduced payout. What is the plan now for QANTAS to try and win back the trust of people in Australia.

MARC:

The new board is taking a very different direction to the one that was chartered under Richard Goyder and Alan Joyce. I think it's fair to say that Alan Joyce really put his personality on this airline.

Audio excerpt — Alan Joyce:

“As a gay Irish man running this amazing company, I’m also very passionate about LGBT diversity within the group…”

MARC:

He spearheaded a number of campaigns at the airline that sided with progressive politics.

Audio excerpt — Alan Joyce:

“This is an amazing country. I came to Australia in 1996…”

MARC:

As a gay man and a very out and vocal gay man, he gave those campaigns a sort of personal legitimacy that could be identified with him.

Audio excerpt — Alan Joyce:

“It was still illegal to be gay in Ireland. Homosexuality was illegal. I left that country, came here, and I always thought Australia was one of the most amazing, open places to be.”

MARC:

The new board has said that they feel like those campaigns may have been a misstep and the new chief executive has not been yet such a public figure associating her personality with the brand.

Vanessa Hudson is an accountant, she was the chief financial officer before Alan Joyce departed, and so far, the way that she's run the business seems to be, for lack of a better term, much more businesslike.

Audio excerpt — News Reporter (Ten):

“Few people know their way around the Flying Kangaroo as well as Vanessa Hudson. She’s managed inflight services, commercial planning, sales distribution, even catering, and the lounges.”

MARC:

The board is asserting that the social justice direction of the company is not going to be such a large part of their branding. And it sounds like what they want to do is just to repair the core relationships that they have between themselves and their customers and their regulators. It really seems like a down to brass tacks kind of business approach.

Audio excerpt — Vanessa Hudson:

“My focus when I step into the role in November is going to be focussed on delivering for our customers, delivering for our people, and also our shareholders and the communities we serve…”

RUBY:

I suppose the other way of looking at this, though, is to question how important trust and reputation really is for a company like QANTAS, given the state of the airline market in Australia and the dominance that QANTAS has. I mean, does it matter if people don't like QANTAS because they're going to have to use them anyway?

MARC:

Yeah, that is an interesting question. And certainly QANTAS is trying its very best to maintain that position for itself. We have had, of course, Regional Express going under. We've had the Bonza airline going under. And we've also had this additional aspect of this story that was happening in concert with the ACCC’s investigations and with Alan Joyce stepping down. Qatar Airways was trying to increase its presence in Australia, and QANTAS advocated very strongly with the Albanese government to reject that push. And the Albanese government did just that. So there is certainly a lot of work being done by QANTAS to keep its position atop the Australian aviation industry, whether or not it's able to do that and rebuild its reputation with its customers. That's a balancing act that's going to be one that we should be watching over the next couple of years.

RUBY:

It is quite a fall from grace, isn't it, for Alan Joyce, but also for the entire company. When you think about the goodwill that QANTAS used to have, I mean, some of it was marketing the famous ‘I Still Call Australia’ home song. But I remember flying QANTAS as a kid, and it did feel special hearing the Australian accents and experiencing that Australian friendliness after being away. There used to be something in it.

MARC:

Absolutely. The fall from grace has been remarkable, and I think that there is a sense that the company has that they can regain that position, but it's really up to the customers whether they can return to that place in the Australian psyche. And I think even if we just go back to say, the campaign for marriage equality or the campaign for the yes vote on the voice referendum, there was a sense that QANTAS had an affirmative space inside the Australian culture and the Australian sort of policy debate, and I think people felt after the pandemic that QANTAS didn't regain that position. QANTAS wasn't in that cultural role of being for Australians in the way that they had before. So it has been a really extraordinary descent reputationally, but I think that they are squarely focussed on repairing that relationship.

RUBY:

Marc, thank you so much for your time.

MARC:

Thank you very much.

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RUBY:

Also in the news today,

Prime Minister Anthony Albanese has met with Indonesia’s incoming president Prabowo Subianto in Canberra.

The two leaders have finalised negotiations on a new defence deal but did not give any specific details.

In the coming days, the Australian defence minister, Richard Marles, is expected to travel to Indonesia to sign the agreement.

And

The 2024 Democratic National Convention is underway in the United States.

The first day included speeches from current President Joe Biden and Hilary Clinton.

Hilary Clinton used her speech to highlight Donald Trump’s thirty-four felony convictions as the crowd chanted “lock him up”.

The event will run until August 22.

If you enjoyed today’s episode, we would appreciate you sharing it.

I’m Ruby Jones, this is 7am.

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