Qantas faces ‘watershed’ moment in history
The move by Qantas to ground its entire fleet is a “watershed moment” for the brand and for the Australian aviation industry, a PR executive has said.
James Wright, GM of Red Agency told Mumbrella that the Qantas brand “would never be the same again” after CEO Alan Joyce chose to lockout workers and ground its fleet in the wake of an industrial dispute.
“Qantas has made the biggest industrial call in Australia for the last 20 years,” Wright said. “The brand will never be the same again. Qantas has been described as a pillar of the business sector and part of the national psyche. But in the future, it could just become another airline – that’s the danger.”
“There is so much goodwill that the Australian public has towards Qantas. But lot of that goodwill has now gone,” he added.
Now is the time for the airline to launch consumer surveys to see how the strike action, and the company’s response, will have hit the brand in a year’s time, Wright noted. “For Qantas this is about playing the long game. Do consumer research now, and see how it tracks in a year’s time.”
Qantas’ rivals have been treading carefully. Wright commented: “Virgin has to strike the right balance. They don’t want to charge too much for flights, or else they’ll be seen as exploiting the situation.”
“Qantas has the sympathy of the media and the business sector, so Virgin has had to test the water and play a low-key role. They want to be seen as part of a solution to the problem, by laying on more flights.”
Expect Qantas to go on “the mother of all charm offensives” after the furore has died down, Wright predicted.
“This is the biggest dispute of its kind in a long time. We’ve seen on the news vox pops of people saying that they’ll never trust Qantas again. Expect that to change as soon as Qantas start offering them some very sweet deals in about a month’s time.”
I would not consider myself a loyal Qantas customer – heading overseas in Dec and they were double the price of other airlines. but I have flown Qantas domestically many times and found them in all reality no better than others. However at the risk of being hit with a barrage of negative comments, with the action taken by Alan Joyce over the weekend I will now look at flying Qantas whenever possible. Any company with management that has the balls to do what he did gets my support. Strong management = strong company. For far too long companies have been held to ransom by overpaid and underperforming union bosses out for their own ends and satisfy their own agenda’s with workers rights at the bottom of their list while they try to justify their own existence. Companies must move with the times – like it or not it’s reality. Be flexible with change, streamline operations and save as many jobs as possible, or wither and die and everyone loses their job which in turn has devastating flow-on effects. Short term pain for long term gain and future security. Well done Alan Joyce you have just earned your bonus.
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Qantas’ share price is up 6% today and the whole market is flat, so the shareholders seem happy with the action taken
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It is absolute BS when people will say they will “never fly Qantas again”. Remember when Virgin had a massive IT meltdown a few years ago? Lots of people saying they would “never” fly Virgin again. I bet most of them have. Most people can’t escape the lure of a cheap seat.
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Forcing a situation that strands 68,000 people around Australia and the world, doesn’t seem to be considering where the money comes from in an airline.
Customers.
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@D
We can guess what the D stands for. The idea that Alan Joyce is in some way doing the right thing is idiotic. The job of management is to manage. In this he has spectacularly failed. If he had been managing he would have handled the situation without major disruption to many thousands of people who had already paid for his product, without devaluing the brand he is paid to develop, and without severely damaging the brand that is Australia. His heavy handed response was the action of a man without judgement, without feeling and without skill. It is the equivalent of an agency CEO telling all his clients to fuck off because a few of them, or a few of his staff don’t do what they are told. Qantas, our economy, tourism, and the travelling public will be better off when this buffoon takes another job, perhaps as a driver for Barnaby Joyce and Tony Abbott.
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two points: will all those people who keep banging on about loyalty and brand kindly note the facts. that is, Qantas share of long haul has collapsed because Emirates, Etihad and so many others have entered the space with lots of low cost capital and low cost staff who fly more hours. Qantas has to compete with that.
second: there are too many airlines in the world. Qantas has been managed well enough to be one of the few that can stand on their own feet. We need to keep them in that shape if we want to have an airline that is not a bucket into which we pour public money.
Joyce seems to me to be straight about this stuff, which is what management has to do. (It’s just a pity that Clifford seems to be a man who enjoys this stuff.)
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There’s an old American Indian saying – ‘never judge a man before you’ve walked a mile in his shoes.’ Qantas’ future was being threatened by inane union demands. an extra 2.5% pay hike per year when they already earned 12% more than Virgin staffers. Extra pay for pilots – who already earn 50% more than Virgin pilots. Joyce may have had to play hard ball for the future of Qantas… I couldn’t say that I know all the facts though – I am sure the unions have their side of the story too – which is different!
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here come the lefties, ready to bash big business when they stand up to the unions. why do unions have a monopoly on disrupting customers whenever they choose? what about unions saying they are going to “slow-burn” the company? better to die a swift death than one by a thousand cuts.
and for all the patriotic rubbish about our “national airline” 80% of us choose another carrier to fly o/s. that is what qantas have to compete with. and the only way to do that is by lowering the cost base and getting rid of antiquated work practices so they can offer more competitive prices.
and sorry unionists, no one gets guaranteed job security, suck it up and learn to fend for yourselves in a competitive global market.
go for it Alan Joyce, you’re the new Chris Corrigan.
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I mostly agree with D
The CEO is paid to represent the best interests of the company and it’s shareholders. His job is to best ensure financial success in the short or long term (dependent on business objectives). If you want Qantas to survive as a global airline, it needs to restructure in the face of competitors (like emirates) that through cheap labour have half the staff costs. The unions & australian public need to understand this and get real. In these fundamental situations brand becomes a secondary concern.
This announcement caused that. He could either go tit-for-tat for several months or force the hand of primarily the government and the unions to force decisions to be made. Good luck to him.
When the Australian government opened the skies to global competition, which created cheap air fares for us all, this was an inevitable consequence. It’s business and us advertising types aren’t very good at understanding this.
Yep, it could have been handled differently, but the status quo has to be disrupted and this is what happened and the media love it
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Agreed that this is a strong decision and companies do need to change with the times, but people do buy a Qantas ticket with the thought that their plane will be flown by a Qantas pilot. And they buy into that safety record.
Pilots and their unions have never threatened management with striking. They have taken non aggressive action via PA’s on their flights.
Qantas is trying to outsource to cheaper overseas pilots with in some cases one fifth of air time experience than Qantas pilots must have in order to fly.
The business uses it’s saftey record all the time in the press to promote itself. They are the ones pushing safety, brand and loyalty. If they weren’t this would be a different story. (lets not forget Qantas tickets aren’t the cheapest. People are buying into a brand when they buy Qantas)
If the company is allowed to go ahead with the changes it wants, no doubt it will save money, but will the safety of it’s millions of passengers be compromised?
Qantas has refused to even negotiate on deals that in some cases are lower than the rate of inflation.
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Sack Alan Joyce and let the poorly paid Qantas workers have a share in Joyce’s bonuses that he should not receive for almost destroying this great Australian icon.
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This is the first big industrial stoush to play out on social media.
In fact I learnt about it on Twitter well before it made the evening news on the TV.
And today the Fairfax media ran a major story on how poorly Qantas used social media during the crisis.
Only time will tell if “the mother of all charm offensives” helps people forget.
But as the social media gurus like to constantly remind us, what gets posted on Twitter and Facebook stays there forever.
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The whole issue of the Qantas brand will be gone soon after the union issue is resolved. Consumers are driven more by need and price today and brand loyalty is almost a non issue with airlines in a highly price competative market place.
I feel sorry for those consumers that have been inconvenienced by the action, but no business can be held hostage by the unions or by staff in general in todays world. Everybody has the right to work, but nobody has the gaurantee of never being laid off, just ask many of those in our industry how that works, so why should those in the airline industry be any different
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I too agree with D.
Think what Alan Joyce did was brilliant management. I am all for worker’s rights and a fair go for working Australians but the union’s tactics were going to send the employer of their workers broke. Hardly ideal.
As workers / employees you need to plan for your own career. As if you can train for one occupation and never expect to need to aquire new skills in 30 years of working. If you want to remain employed, work out what skills you need to do that. Aircraft maintenance is a poor choice. Try switching to large mining truck maintenance and you’ll be lining up outside high end fashion or Bose shops rather than forming a picket line.
Julia’s mess of a Fair Work Act Australia has been tested. (perhaps Work Choices didn’t look so bad afterall) and am sure industrial lawyers around the country were so excited .
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I think Virgin have done a great job at positioning their Brand as being ‘there for the traveller’ and being on the side doing all they can to get passengers where they need to be. If this helps produce some healthy competition in the market than we all win
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It disappoints me when people take sides on these complex issues. All parties in this dispute are to blame: the unions, Qantas management and the federal govt.
To think otherwise is simplistic or left or right-wing rhetoric.
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As someone who spent a night on a bench in Hong Kong airport, thanks to Joyce’s decision to cancle flights, with seemingly no communication or operational plan in place, I have little sympathy for the negative press Qantas are receiving.
While I understand that a strong stance is needed, I can’t understand how he can justify screwing over so many customers, loyal or not, who had paid for a service and found themselves stranded, with little or no help from the airline.
The communication was terrible, the timing worse. I was fortunate in that I was on my own and can look after myself, but there were elderly people and families with babies who had no accomodation or contingency in put in place by Qantas and were left stranded.
Shocking.
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I just have to say that without a doubt Alan Joyce is the most moral CEO i have ever seen. He stranded 68,000 passengers and tarnished the brand for the short term, all to save the lives of people who would have died if one of those planes came down due to being unmaintained and with tired pilots. He deserves his bonus and holds peoples lives first over peoples short term happiness.
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Regardless of public opinion, if Qantas reduce fares below that of it’s competitors post grounding, people will pay the fares and choose to fly with them.
I don’t think people care enough about what Alan Joyce has done to completely shun Qantas as an airline.
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A great deal of opinion in these postings, but at least some have admitted they don’t know the facts. QANTUS hasn’t paid a dividend in two years and the share price has been falling before the unions started any action, so management hasn’t been exactly glowing with success. These are issues which make Joyce’s pay rise look very bad PR, a board apparently more concerned with themselves than with their bosses (investors). Are the changes proposed going to improve the business? Is the board being honest with investors about costs? Or is this a Patrick’s determination to call the shots irrespective of consequences? These are reasonable questions, but unfortunately not ones to which Joyce gives answers.
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And here come all the union bashers – welcome Rob et. al.
Maybe, and I mean just maybe, that management’s failure to acquire the fuel-efficient 777s for overseas flights (when fuel is around half their costs) might be a contributing factor. Talk about strategically locking yourself into a competitive disadvantage!
Now with that avenue closed off until Qantas get back to the top of the airliner acquisition queue, the only serious avenue to maintenance of the half billion dollar profit is to reduce labour costs (but don’t mention the acquisition stuff-up!). There is however the issue of the conditions of sale when the Act that enabled the sale was passed – conditions that in essence ensure that at least half the jobs and the head office are maintained in Australia for the flagship brand (but free-for-all on subsidiary brands).
Even with that I’m not sure how easily adopting the Jetstar model sits with me when the average cabin crew member is paid $400 per week (part-time) and the average pilot salary is $38k p.a. I sort of worry when the cab driver that takes me to the airport earns more than the pilot in charge of the multi-million dollar airliner.
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Maybe Richard Branston could run Qantas as well as Virgin. Everyone would win.
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Whether or not Joyce is leading the company with strong survival actions, the company has completely failed in terms of its external and internal relationships. I agree that the IR dispute has been well over done and needed to be hit on the head, however, communications with stakeholders has not occurred and this is QF’s failure. Surely a company of this size has a crisis management plan, while this decision is occurring for the first time, they must have thought this through in terms of the gravity of the effects of the decision, and how to control the media and be first with the real news where possible, clearly not. Its a huge gamble, yes people will fly with them again, (I wont), but the damage to the company may never be recoverable and their international competitors must be licking their lips. It is a sad day for an iconic Australian brand.
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@Serena: has QANTAS already rebranded as QANTUS? I hope you’re not a copywriter…
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Used to be in advertising, now I’m a farmer. Many similarities as most of you will know. Had this Irish Sheepdog. Initially plausible , but developed some strange ways. Sheep wouldn’t go through the gate so the mutt lost it and drove them into the river. Most of them drowned. Dog ran off to the airport. Caught up with him though as the flight he was trying to board to Ireland was cancelled. He never was much good at picking airlines that dog. Anyway, took him home and shot him. Won’t bring the sheep back of course, but it made me feel better. Food for thought for the other dogs too.
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@Thomas – agree with most of what you say regarding unions and particularly about the absurdity of trying to lock in long-term job security for what are soon to be obsolete jobs/job functions. The need to streamline the business is absolute; however your rationale for Joyce as having handled this well falls flat with the timing of his pay increase. Service and brand reputation of Qantas has been in freefall for some time …
I think you underestimate the long-term brand implications – not that Joyce cares too much as there are ulterior business motivations at play. No matter, if punters do take up Qantas on a cheap flight offer in future, they’ll do so with a bitter taste in their mouth and in many cases with their back up. It becomes just a cheap flight from A-B, not an experience much as it would be with any low-cost airline! That’s not what the Qantas brand and business is about … Jetstar takes care of that.
The brand has been damaged over a period of time, this has reinforced the bad publicity and word of mouth in a massive way and Qantas will be on the back foot for a very long time. It will never regain the exceptional reputation in once had. Both sides have behaved very poorly; although as a CEO who believes he’s worth $5M a year, he should be able to manage his company (and iconic brand) without resorting to this kind of action.
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The conflict here is that Alan Joyce is working on behalf of the shareholders whereas the unions are representing the interests of the employees.
One way to remove the conflict is for the employees to buy the company and balance these interest themselves.
Some numbers. Qantas has 33,000 employees and a market capitalisation of $3.5 billion. Each employee would need to contribute ~$106K to buy the company.
The average superannuation balance in Australia is somewhere between $71K for men and $41K for women. Let’s make it an even $56K.
Margin lending outfits are currently offering an LVR on Qantas of 70%. If each employee bought $106K with their $56K super and a borrowed $50K, their LVR would be around 47%, a comfortable margin.
Wouldn’t it be interesting to see what happens when their own retirement rests on the successful longevity of the airline?
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Farmer, the best post I have read on Mumbrella. Period. Want to run an airline?
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@Carole Goldsmith — you do realise that Qantas pilots are paid 50% more than their counterparts at Virgin and the baggage/ground staff at Qantas are paid 12% more than their equivalents at Virgin, right?
Why aren’t they all leaving the “grossly unfair” Qantas in droves? Because they are very well aware that they’re on a sweet wicket as it is and won’t get anything near their CURRENT salary working the same role for any other employers in Australia.
Joyce did the right thing for the company and the shareholders, and evidenced by how well Qantas traded this morning the market overwhelmingly agrees. Yes they’ll be left with a bloody nose but Australians, by and large, are a forgiving nation and it won’t be long before this is a relic of the past.
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Does anyone else get the impression that Alan Joyce is there to do exactly the thing he’s just done ie take the flak, take the money and then leave? Perhaps the reason he’s being paid such an exorbitant fee is to so that they can fake sack him later to appease the public?
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I’m a little unclear why, on Mumbrella, we’re caught up in the union / management furphy.
The unions customers are their members. They speak for that agenda and their own existence.
The board’s customers are their shareholders. These are a varied bunch, but are likely to also include the many of the organisation’s customers below.
The organisation’s (including staff and management) customers are the poor fuckers who were left stranded with no notice, support or information.
People are unlikely to “never fly Qantas again” because it has a distorted local and regional market presence.
However, many will now consider other carriers, for both price-sensitive and value-sensitive (note there is a difference) where they wouldn’t have looked past Qantas before.
That is what has sustained Qantas this far. Is there any left to sustain it into the future?
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The following ‘new’ Values for Qantas were mentioned at a recent presentation on the development of their ‘next generation’ check-in system – Wisdom of Experience, Care, Forward Thinking, and Contemporary Australia. They provide an interesting filter for considering the behaviours of all key stakeholders in the current dispute – which has been simmering, since Jetstar was separately created.
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Lola,
If you’re going to tell a story tell the whole story – because the wage claims also include super etc. – which is where the big costs come in.
And rumour has it that one of the unions original claims was for guaranteed salary increases for the next 20+years!
Carole Goldsmith,
So, your idea of support of the unions claims is to grant Qantas pilots, air crews and ‘engineers’ Virgin pay scales! Most are nearly half what Qantas employees get now.
It’s a competitive world out there. Its about time the unions realised it.
But if you think the unions are worth supporting then let’s see you support Qantas the next time you fly overseas – even when a seat on a good o/s carrier costs 30% less.
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Putting aside the bizarre lack of true negotiations with the unions, the poor handling of government relationships, the timing (just after the AGM and after a payrise for the CEO), the damage to the brand, the customers they’ve put out and the massive, massive real cost to the company – much of which is going to go straight to their competitors (I’ve never seen a situation where a company has willingly flicked wads of cash to a competitor).
The general impression we’re left with is of a CEO and senior management who are, frankly, out of their depth. That, and that alone, is enough to condemn them.
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Dear Version
Thank you.
Sincerely
Frequent Flyer
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My Dad flew for the air force risking his life to rescue people at sea.
He earned significantly less than his mates who ‘went civil’, believing he was serving his country.
Next time we speak, I’ll ask him if he thinks $500,000 pa is enough to drive a ‘glorified bus’.
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@ John Grono Thanks for the compliment. But no, I don’t want to run an airline, since I retired from advertising I can’t afford the lobotomy.
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But – no name comment – you do realise that Qantas baggage handlers are paid around $16 per hour to handle heavy bags why Joyce gets his outrageous bonuses. What is wrong with this country and why are workers paid so little and corporate heads and directors paid grossly indecent amounts.
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Alan Joyce’s decision to ground the fleet was a patriotic rationalization of “the spirit of Australia”.
Democracy is something the unions have abused. Intentionally abducting the profitability of our national carrier, creating a marathon of disruption for local businesses and pissing people off for weeks. They’ve mistreated a locus of control and are holding a community of Australian businesses to ransom.
It’s almost maniacal that these employee’s would euthanize the carrier. Qantas is a lovemark brand like Vegemite is for Australia. We may be tough on them domestically, but consumer’s will protect the reputation of the carrier because it is an ambassador for our nation. We’ll turn on the unions.
Australia is a society based on meritocracy and the balance of power here is swayed by bullish unfair play by unions. Quasi Australian. The realisation will come soon.
I have as much sympathy for the unionists as I do an immigrant claiming asylum on account of the weather. Sorry excuse. Gillard should have intervened weeks ago.
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@ Farmer, where were you at the negotiations table when quite clearly you were so sorely needed?
Could have avoided this whole mess.
@version, I like the way you’re thinking. An excellent question posed: how would the employees behave if they were the shareholders?
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Before you judge a man, walk a mile in their shoes, so that when you do judge them, you’re a mile away and have their shoes.
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I agree with D.
I’m now wondering when the ‘Alan Joyce for PM” movement is going to start because God knows we need a lot more of this strong leadership.
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Well done Qantas. Your brand has gone up in my opinion. Refusing to have a gun put to your head.
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There are some things to learn from the QANTAS play (there always are).
I doubt, though that the brand will be as damaged as some commentators are predicting and whether it’s “pillar” status is in danger.
In fact, I wouldn’t be surprised if it strengthened in the longer run. Many punters have had enough of unions holding companies to ransom on any platform..
What’s a shame is that unions really don’t represent the majority anymore, and most employees are reluctant followers, but that’s not the point of this.
What is the point is that this game has yet to play out to any point where anybody will know for sure what damage, if any is done and how this will all serve as a lesson in the future.
It’s just too early.
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@Carole, should a baggage handler with ambition wish to progress beyond that role into management, then they should be entitled to whatever ‘bonus’ he or she deserves or the board and shareholders agree they should receive.
Otherwise, accept the job and the responsibilities that go with it.
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@ David – I’m definitely not pro unions, but when you say “What’s a shame that unions really don’t represent the majority anymore” are you saying that institutional investors do??
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Kirsty, there must be two Qantases then. The profitability of the Qantas that grounded its fleet was more affected by the poor decision making of the Qantas Board and management over the past four years (e.g. the 777s) than during this period of negotiation and spasmodic union action. More work hours were lost by Joyce’s decision to ground the airline that due to any industrial action in the past year.
So, I agree that we DO need strong leadership. The Board should (i) read their corporate constitution and realise that Joyce’s strategic plan is in violation of that then (ii) sack him.
And as Matt P suggests … let’s out Farmer in charge and get it sorted out.
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It pays to take a look at the bigger picture. Current mgmt at Qantas have been criticised for failing to adhere to basic concepts outlined in the company constitution and the intent of those concepts. Workers who stand up for their personal rights at the same time fighting for the integrity, or brand credibility if you prefer, of Qantas deserve a better go. If Qantas is unable to find a better strategy than to abort operations & lock out of staff, perhaps they don’t deserve to be in business.
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@ version. Thanks for your populist clap-trap homily – I was wondering when that one would get a run.
If you had one scintilla of brains you would know that superannuation is preserved until the age of 65. What a brilliant business planner you must be.
Of course, you could look at the many instances where businesses (acknowledgely mainly SMEs) have gone to the wall and rather than face closure, have been ‘bought out’ by the staff and management and been transformed into viable profitable businesses. Of course this model also works in larger industries, such as the transformation of the German auto industry when the unions were largely amalgamated but ‘got a seat at the table’. Compare that to the Thatcherite UK ‘solution’ and look where the British auto industry is now. But please don’t let the facts cloud your judgement.
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@ Paul McGinness haven’t seen you around these parts before….union troll perhaps? most of us here support getting off your arse and making your own way, not acting like a bunch of self-righteous thugs that are owed a living. haven’t you guys got better things to do like having an expensive lunch and booking an escort? or overthrowing a prime minister?
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Let’s see.. 21 days to agree with an option of another 21 days to settle.. if Fair Work Australian has been well written then subsequent stoppages in the interim leading into arbitration will also be forbidden.. righty-o.. that’s Christmas / New Year flying period done!
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@Paul McGinness
I was suggesting the qantas employees could buy the company via their own self managed super funds. I thought it was implied that this investment would of course be preserved until retirement.
Thanks for your feedback.
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Getting the brand back on its feet is going to pose a major hurdle. However, if the airline does overcome the impasse, it will surely deliver better services to customers.
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FACT: Qantas pay their staff on average 12% more than Virgin. You be the judge of where the Unions will go next
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Hmmmm….. the whole saga reminds me of the mole sent in to drill holes into AOL Australia. Call me a Conspiracy Theorist, but one wonders if Alan Joyce is paid more by another airline to kill Qantas than he is being renumerated at Qantas to keep it alive.
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@J – FACT: people who blindly follow ‘facts’ are fools. Virgin’s structure is different so the average s are not comparable.
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@Thommo LOL!!!
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You cant compare a qantas A380 pilot to a virgin 737 pilots wage. So stop citing that 50% more crap. They are completely different! Its like saying that the kid in mcdonalds flipping burgers should get what matt moran takes home…
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Thommo. So far wide of the mark it’s not funny. Have never been a member of a union, and never will, being a self-employed businessman. It’s just an area of study of mine for the past 35+ years. See there’s the difference – I work on facts and not philosophical shibboleths.
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