Hey, what about the customers? Qantas is waving the chequebook at employees, with the airline revealing this morning plans to award $90 million in surprise bonuses for up to 28,000 workers. The airline says a one-off payment worth 5% of base salary will be made to all of the employees who have already accepted an 18-month wage freeze. The award will be made just after the release of the airline’s full-year results on August 20, which are expected to reveal earnings close to, if not more than, $1 billion. And Qantas says bonuses for employees not currently covered by the wage freeze policy will be made once enterprise bargaining agreements (EBAs) including the wage freeze are finalised. As of March, 13 employee groups covering more than 7000 Qantas staff had already agreed to the wage freeze, and a key EBA for long-haul pilots is currently being voted on.
That’s all well and good, but the airline hasn’t done much to cut the fuel price surcharges imposed over the years when oil prices were US$100 a barrel or more — except to tinker with frequent-flyer awards. The airline said last month it will reduce the fuel surcharge on tickets bought with frequent-flyer points (thus benefiting the airline). it’s the second time this has happened this year. But for non-frequent flyer customers, nothing. At the start of this year Qantas and Virgin both rolled the surcharges into their base prices for international tickets. So bonuses for staff are wonderful (to make up for the wage freeze), but most customers are paying for that largesse, not the airline. It’s called stiffing the customers and it’s not nice. — Glenn Dyer
US rate rise still looms. That’s the bottom line from the June US jobs report, which was brought forward a day because of the Independence Day long weekend. There were 223,000 new jobs in June, just under the forecast 232,000 new gigs. But the jobs gains for April and May were cut by 60,000 and there was no wages growth as the number of work hours remained steady. Hourly wages rose by just over 2%. The unemployment rate fell to 5.3% from 5.5%, the lowest level since early 2008, but the fall happened because more than 400,000 people left the labor force. The government said 254,000 new jobs were created in May instead of 280,000. April’s gain was cut to 187,000 from 221,000. Wall Street ended lower and lost more than 1% over the week. For Australia, though, there was a 6% slide in iron ore prices to US$55.63 overnight and another 3% slide in China yesterday (despite an unparalleled attempt by the government and regulators to stop the sell-off from deepening). Friday usually brings a big slide in the Chinese markets — keep watching. — Glenn Dyer
Greece remains the word, again. The poll is on Sunday — and few people seem to understand what is actually being voted on. The International Monetary Fund intervened overnight. The IMF warned that Greece needed an extra 50 billion euros over the next three years to stay afloat, not the 29 billion in the bailout offer the Greeks tried to reactivate earlier this week. Greek Prime Minister Alexis Tsipras again urged voters to reject a bailout offer from lenders and said he hoped to sign a new deal Monday. But headline-hogger Yanis Varoufakis said he would resign as Greece’s finance minister if Greeks vote “yes” in Sunday’s referendum. He told an interview with Bloomberg that if he quits, he will remain as a member of Parliament and will work with whoever takes over. Varoufakis also said the Greek government will find a way to sign the bailout deal on offer from the country’s lenders if Sunday’s referendum ends in a “yes” vote. Varoufakis also said he would “prefer to cut my arm off” than sign any deal with Greece’s creditors that did not include debt relief. Let’s hope it’s not the arm that he uses to sign documents. — Glenn Dyer
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Miracles do happen? The incredible shrinking Pacific Brands (PBG) produced a surprise earnings upgrade yesterday, and shocked investors couldn’t believe their eyes. Up went the shares — rising by more than 50%, making it the best-performing share of 2015-16 (OK, I know its after only two days). For much of the past four or five years PBG has been shrinking itself to try and find the right mix to survive in the sluggish Australian retail scene. It has tried local production, then moved offshore to China (didn’t they all) and then sold off assets last year and earlier this year to get rid of non-essential parts of the company. And the shrinking strategy has worked, for now, and so did the review, which produced the new approach and new management (the old one didn’t like it, so out they went). Pacific Brands attributed the higher earnings to cost-cutting and the continued strong performance of its Bonds underwear and Sheridan brands in the June half of the 2014-15 year. (Knickers, socks, sheets and towels, does anyone besides me see some synergy here?). So earnings (the company has a surfeit of losses) could be as high as $65 million, against the original forecast of $63 million, and the $91 million for 2013-14 that became a whopping loss after $224 million in write-offs. — Glenn Dyer