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Joyce rejects Qantas international losses “conspiracy”

written by australianaviation.com.au | August 24, 2011

Qantas has rejected claims its mainline operations subsidise Jetstar. (Seth Jaworski)

Qantas CEO Alan Joyce has rejected as a conspiracy and a “ludicrous suggestion” claims that Qantas was subsidising Jetstar to make its low cost carrier’s profit figures look good at the expense of its mainline operations.

In parliament last night independent Senator Nick Xenophon said the airline’s assertion its international operations were losing money needed “forensic examination”.

“The reality is that Qantas has long been used to subsidise Jetstar in order to make Jetstar look profitable and Qantas look like a burden, and when there’s a profit to be made Jetstar makes it,” Senator Xenophon claimed.

Said the Senator, “It would be foolish to take management’s word Qantas International is losing money.” Instead he suggested that Qantas, to avoid the restrictions of the Qantas Sale Act, could have “a strategy of private equity selloff by stealth”, with Qantas “moving assets out of Qantas and into an airline you own, but isn’t controlled by the Act.”

The Senator’s comments came as reports emerged that the Qantas pilots union AIPA had commissioned consultancy firm PPB Advisory to examine the company’s financial reports to investigate the airline’s assertion its international division was losing money.

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According to reports, PPB’s preliminary analysis questions how Qantas Frequent Flyer costs are allocated, and which segment of the company absorbed an unallocated loss of $123 million shown in Qantas’s FY2010 results.

“It seems clear from the financial analysis and other anecdotal evidence that we [Qantas mainline] are carrying some of the costs of Jetstar,” AIPA vice-president Richard Woodward was quoted as saying.

At a press conference for the airline’s annual results announcement this morning, Joyce responded to the claims by saying, “There’s no convincing some people. They just have a view and whatever we say they won’t be convinced.”

Joyce said he was “going to add this conspiracy theory to a long list of conspiracy theories.”

Qantas says losses in its international operations require it to drop services, defer A380 deliveries, retire early some 747s and make redundant up to 1000 staff.

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Comments (7)

  • pez

    says:

    So the unions and Gov’t blame everybody but themselves? Yep, sounds about right.

  • Chris

    says:

    What do you think AA editor?

  • Redundant

    says:

    For the CEO to comment that such speculation is indeed “ludicrous” suggests that there is probably some substance and truth to all of this. I’d say that the truth lies somewhere in the middle. JQ clearly have benefitted in years past and continue to benefit from the funding provided to them by QF and this is why the QF brand and the company is suffering as it is.

    I just wonder how this is a legitimate way to run a business, airline or not.

  • Random

    says:

    Why are the only profit and growth opportunities so heavily wedded to UK and US routes whilst virtually every other expansion opportunity is seen as the preserve of Jetstar and the LCC mentality?

  • Peter

    says:

    How is this for a conspiracy theory for Mr Joyce, would it be possible that Alan Joyce is forcing the share price down for QANTAS on purpose, for another take over attempt?
    If he has nothing to hide, why doesnt he answer the 60 odd questions asked of him by the pilots and engineers?

  • qantasrox

    says:

    Joyce is running the company into the ground, his backwards policies are destroying their market share. He should be growing qantas, not downsizing it. He is destroying the only advantages that qantas has: Experienced, Prestige, Austrlian owned and an impecable safety record. He is the worst manager they have ever had

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