Proving where there is smoke there is fire, Qantas CEO Alan Joyce today announced his airline was withdrawing its sponsorship of Tourism Australia, citing a conflict of interest where Tourism Australia chairman – and former Qantas CEO – Geoff Dixon is involved in a new takeover bid for the airline.
“Many of you have been reporting on a club of investors taking a stake in Qantas, a club that includes some key players from the rejected APA private equity bid in 2007,” Joyce, speaking to the National Aviation Press Club in Sydney, said, referring to the consortium reported to include Geoff Dixon, former Qantas CFO Peter Gregg, retailer Gerry Harvey, advertising executive John Singleton and venture capitalist Mark Carnegie.
“Given that the Tourism Australia chairman is a member of that APA Mark 2 club we deemed it prudent to suspend our partnership with Tourism Australia,” Joyce said. That partnership is valued at $50 million over three years. Instead Qantas says it will work directly with state-based tourism bodies.
A key point of contention between Dixon and his backers and current Qantas management is the forthcoming Emirates alliance. Dixon has been a vocal critic of Middle East carriers such as Emirates, and is known to have, as Qantas CEO, rebuffed an approach from Emirates president Tim Clark mid last decade to form an alliance between the two.
Joyce noted that 98 per cent of Qantas shareholders supported the Emirates alliance plan. “We have undertaken research into how this partnership is viewed among customers and our staff. The numbers are overwhelmingly positive,” he said, calling Emirates a “killer partner”.
“Those of us who are custodians of Qantas today see ourselves as builders,” Joyce said. “We will never be wreckers of this amazing company that belongs to Australia,” he said in pointed reference to his former friend and mentor in Dixon, whose plans for Qantas are reported to include selling off the Qantas Frequent Flyer program and parts of Jetstar.
Other highlights of Joyce’s speech and subsequent question and answer session included:
– Conceding that the timetable to put in place the Emirates alliance in time for its April 2013 “is frankly a stretch”, as staff work over the Christmas break “negotiating airport slots, getting our IT infrastructure connected, developing joint systems and protocols for customer handling and experience, finalising codeshare, interline and frequent flyer arrangements.”
– Labelling Virgin Australia’s creation of a separate legal entity for its international operations as “a legal manoeuvre” where “Virgin’s international operations [are able] to be parked in a separate company to all intents and purposes owned by the listed Virgin Australia,” which, Joyce noted, was currently 65 per cent foreign owned. “So we’ll be talking to the relevant authorities about that.”
– Noting that the near doubling in the price of fuel from $65 to $112 a barrel since the Global Financial Crisis costs the Qantas Group “a billion dollars a year”. “Our profits would be at record levels if the fuel price had not doubled.”