Qantas’s profit upgrade has come just in time to remind Virgin Blue who’s top of the pile.
As a two fingered salute to a competitor, it’s a classic. The statement Thursday morning from Qantas that it believes its 2005 financial year profit, “will exceed its 2004 profit before tax of $964.6 million”.
Coming 24 hours after Virgin Blue stunned investors by revealing that lower than expected passenger numbers in November and December would push this year’s profit down by 15% or so, the Qantas announcement was a brutal reminder of just who’s top of the pile.
It was a very Geoff Dixon sort of message to send to the market, the competition, investors and governments. Here’s the brief announcement from Qantas company secretary, Brett Johnson.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
It was aimed at stabilising the Qantas share price which was sold off in the wake of the Virgin Blue announcement on Wednesday, falling 11c on the day to $3.51.
Cunningly, Qantas released the short statement just before trading opened on Thursday so it would be fresh in investors’ minds rather than the lingering worries of yesterday about Virgin Blue.
But initial reaction was muted. The shares rose to a high of $3.55 then settled back to the Wednesday close of $3.51 in the first hour of trading.
Qantas said its first half result will be produced on February 17, that’s going to be a big week for profits with the Commonwealth bank due that week and the Coles Myer first half and 2004 calendar year sales figures due out that day.
But as aggressive as the Qantas statement was, you have to wonder if it is another example of the blindness of the board and senior management to the perceptions of investors and the travelling public.
There’s Geoff on Monday in that interview in The Australian with Steve Creedy threatening to take up top 7,000 jobs offshore to Singapore, India and other places to main the airline’s competitiveness.
There are the several missives and statements over the past week from Qantas and its executives in letters to The Australian Financial Review and statements to the media about how unfair Singapore Airlines is in wanting to fly the Australia-US routes.
That ranged from an AFR story last week by Qantas Pet, Tansy Harcourt and statements this week by Dixon in The Australian and other papers from the launch of the Airbus 380, at Toulouse.
Then there was the letter in Wednesday’s AFR from David Hawes, Qantas’s head lobbyist, accusing Singapore of ignoring third party rights in its argument and claiming that Qantas is constrained from flying more often to Europe through Singapore. That was in reply to a letter from a Singapore executive accusing Qantas of wanting to stifle competition and ignoring consumers’ desires for more choice.
Then Singapore’s CEO, Chew Choon Seng said in Toulouse that Qantas’s argument was essentially wrong. That while Qantas had the right to fly to third countries through Singapore, such as London and Paris, Singapore had NO rights to fly to third countries from Australia.
Which is the crux of the Singapore argument and the point conveniently forgotten by Dave the Lobbyist Hawes and all the other flacks and executives involved in selling the Qantas line.
That Qantas (with the assistance of the Singapore Government) can run Jetstar Asia from Singapore to other countries in the region says volumes about the freedom to operates in Singapore and beyond that Qantas really has.
That Singapore cannot fly from Australia to the US, Japan, New Zealand and the Pacific, says how little freedom (and I know bi-laterals would be involved) Singapore Airlines has here. Hence the negotiations next month on this issue with the Minister for Qantas, sorry Transport, John Anderson.
The latest Qantas profit announcement will raise a few eyebrows from cynical travellers. They have already had their frequent flier points downgraded and made less valuable, they are charged a $15 telephone booking fee, travel agents have lost income from Qantas slashing commissions to 1% and there is a high level of belief that service levels have gone down, judging by the reaction from Crikey readers to the articles on Qantas.
But it is not only those highly erudite readers of Crikey that have such fears. Here’s a great column from today’s Sydney Daily Telegraph detailing several egregious examples of Qantas’ customer service mantra in action.
This ranks as a classic, especially the columnists experience with the frequent Flier Police at Qantas. Talk about losing the hearts and minds of customers.
But judging from the attitude of the CEO down, the airline seems not to care.