Qantas CEO, Geoff Dixon sounds
like he was in a combative mood at a private lunch in Sydney on Monday
where he forecast strong profits for the present year and told his
audience that senior politicians in Canberra wouldn’t care if Qantas
collapsed. Sounding a bit isolated and vulnerable, Dixon claimed that
the foreign minister, Alex Downer, said other airlines from overseas
would take up the slack in the event of a Qantas failure, a comment
that seems a little bitter.

Dixon has been fighting a strong
rearguard action to keep rival Singapore Airlines (also mentioned in
his lunch address) out of the vital Trans-pacific routes and has been a
frequent visitor to Canberra to lobby the Howard Government. His
comments on the profit situation at Qantas would indicate that the
airline has been relatively untroubled by the strong rise in world oil
prices.

But it must have been an interesting lunch in Sydney on
Monday. Around 160 former Qantas marketing people from the past 30
years or so met at the American Club where Dixon was at his pugnacious
best in the keynote speech. Former Qantas CEO John Ward was sighted,
along with a number of former senior managers, as well as people who
used to work in marketing and sales for the airline in the 1960s, 70s
and 80s when it was well and truly government-owned.

A former
Qantas person says that during his speech, Dixon told the audience that
Qantas was looking at declaring a profit in excess of $1 billion for
the current financial year which ends on 30 June. Dixon didn’t specify
the basis for the profit.

Based on its first half performance
and in the 2004 financial year, earnings before interest and tax and
depreciation will be well above a billion dollars with a sharp rise
also coming in after tax earnings. Qantas says it normally earns 60% of
its profits in the first half and indicated in February that remained
the case for this year.

The first half result in mid-February,
revealed that Qantas earned a record $601 million before tax and $458
million after tax in the six months to December. Based on the pre-tax
figure, Qantas would seem to be on track for a $1 billion-plus profit
before tax. In 2004 Qantas earned $964 million pre-tax and $648 million
after tax, so a billion dollars or more seems well within reach before
tax.

On all indications Qantas is heading for its best ever
profit, high oil prices and fuel charges not withstanding. Time
therefore for some guidance, an update perhaps, given the volatility
from those huge oil price rises (now seemingly cooling a little).

According
to our informant Dixon was scornful of the Howard Government and its
advisers. He told the audience that senior Government politicians in
Canberra have little understanding of the importance Qantas plays in
the balance of trade. He continued his attack on foreign carriers with
government ownership: notably Emirates, Singapore Airlines and Qatar
Airways which continue to enjoy majority or total government support
and funding. Dixon told the group that Emirates only produces a
six-page annual report which is supposedly audited (Qantas’s annual
report is over 100 pages in its complete form).

He also singled
out Emirates as having a distinct advantage over its competitors as the
Chairman of the Board is also the Minister for Aviation, controls the
principal airports in Dubai and the oil supply. Dixon emphasised to
former staff that he wasn’t whinging!

Peter Fray

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