The most urgent question for shareholders at next week’s Qantas AGM in Perth isn’t the lavish reward to former CEO Geoff Dixon, but whether the group’s toxic management culture will destroy his replacement Alan Joyce and cripple the carrier.

Consider this complaint from one of the shareholders who simply hasn’t the time to go west and jump up and down.

I’ve been fascinated to read in the last couple of days of the investor disquiet over the termination payment enjoyed by one G. Dixon when he retired as the QF CEO. It’s about time serious questions are being asked but from where I sit, Dixon’s payment is but the tip of the iceberg as a feature of the modern-day culture at Qantas is that very few actually retire. People just hang around waiting for “The Package” — and 99% of Executive staff receive it, whether they are retrenched or simply “agree to go”. And many who are retrenched or who accept a voluntary redundancy package (“VR”) are replaced.

It would be fascinating to know the annual numbers as to how many ground staff genuinely retired, or were genuinely retrenched as compared with those who took VR. Shareholders will be staggered. Apart from Dixon, I see in a recent annual report that Denis Adams was paid in excess of $1.3m in termination benefits, yet he was retained as a Director of a couple of Qantas entities like Star Track Express. While his payout isn’t in the same league as Dixon’s, it is significant.

The culture is rotten to the core.

Shareholders would also be disturbed to know that quite a few Execs who have taken a package have subsequently returned to the Company as contractors or consultants. Quite a few of the start-up team of Jetstar Asia were ‘retrenched’ execs on something like AU$1000 a day plus living expenses in Singapore. Others have been seen in the various floors of Coward Street [ Sydney headquarters] on slightly lesser sums of money for extended periods.

On another matter, it would be interesting to know how they cost the fares of Directors a la Ms Cross, especially as this travel is apparently firm and enjoys a non-offloadable status. Do they charge the Staff Travel rate, the discounted market rate, the published rate or a “special mates rate” for directors? The Qantas response to this would be illuminating to say the least.

Joyce has already terminated, or received the resignations of, the Dixon praetorian guard. He has reversed the neglect of maintenance, but it will take time to show, brought some of the work back onshore, and funded real efforts to restore traineeships to the organisation, with rumours of considerably more to come.

But Armageddon is coming in terms of the reverse takeover of Qantas by Jetstar, which is seen within the Ryanair clone that he ran as founding CEO as the only way the work practices and managerial dysfunctionality of Qantas can be rooted out.

Joyce heads an airline that struggles to carry just under one quarter of the international travel market in Australia compared to nearly half of it before it was privatised. The domestic full service brand risks being eclipsed in size by Virgin Blue as the group pushes resources into Jetstar.

The fleet strategy to claw back international market share and sharply improve fleet efficiency is pinned to the benighted 787 Dreamliner project. Joyce still believes Boeing will deliver the necessary 787s from mid 2013, which makes him seem like a willing victim of spin and nonsense, and claims Jetstar isn’t going to compete head on with Qantas even though he has signed off on changes that do the exact opposite.

Amid the distrust and hostility that exists in the Qantas and Jetstar camps the group hasn’t overcome poor decisions on its IT resources, or resolved a commercial strategy to deal with the consequences of Jetstar driving a shrinking number of loyal frequent flyers across to Virgin Blue.

All of these questions need answers, at a time when Qantas is losing money on its flying operations and clawing it back by selling the ultimate in ephemeral products, frequent flyer points to third parties who use them to enhance the sale of groceries, flat screen TVs and other white goods.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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