AJ Speech to American Chamber of Commerce - confirms 2800 Qantas job losses

[SeatBackForward]

My fundamental problem with Joyce is that i disagree with him on what the assets and value of Qantas are. Joyce has explicitly said that he thinks Qantas' great strength is jetstar and the ability to get capital and invest it in low cost franchises around Asia. He believes that their superior management of low cost franchises is the future of the company and that they are better at it than anyone else.

Alternately, he has given little or no value to the Qantas brand, to the reputation for safety and service built up over many years and to the loyalty and respect that people feel for Qantas. This is evidenced in the ways in which Qantas has plummeted down the rankings of most respected brands and companies under his tenure. This not an accident or someone else's fault this is effectively company policy to redeploy internal resources away from Qantas.

What i really think he is doing is dismantling the house of cards piece by piece and it will inevitably collapse. Ignoring the claims about Qantas actually directly subsidising jetstar, the reality is that Qantas is the thing that holds the whole thing up. Is the Qantas Frequent Flyer program profitable without a strong Qantas? How much of what drives value to jetstar are the routes seeded by Qantas, the prominent marketing on the Qantas web site and the spill over from the Qantas brand? You take Qantas out of the picture and the whole thing collapses and every thing he appears to be doing is weakening Qantas and moving towards that scenario. I don't believe they are superior managers of low cost franchises i believe they are running down the value of one asset to try and build the value of another and i'm not convinced by it as a strategy.

As folks know i'm a very active Virgin flyer and don't fly Qantas much these days. However the original reason for that is that Qantas stopped flying where i needed to go and ceded the route to Jetstar. Qantas seems to be doing this more and more and i'm sure i won't be the last individual to reach that tipping point where the whole package of Qantas has so many holes in it that i can't make it work for me anymore.

This needs to be published beyond the AFF forum.

 

[whatmeworry]

So QF will become the LCC and Virgin the full service carrier. What a role reversal.

 

[SeatBackForward]

So QF will become the LCC and Virgin the full service carrier. What a role reversal.

Not quite. QF Domestic will become a three city pony. QFi wont exist, and JQi/d will be the shining becaon of corporate mismangement. At least in AJ's wet dreams.

 

[yohy?!]

I agree things are bleak and AJ is highly unlikeable but I think there is a greater plan in place in the long run.

The party line is always around international being unsustainable due to a higher cost base compared to competitors, so what can they do?

Either people take pay cuts (unlikely given how high the legacy QF salaries are) or people go (either by natural attrition or redundancy). Over time the high cost elements are removed and international flying becomes profitable again for QF.

I'm convinced now that JQ is merely a holding strategy to keep capital and flying capabilities in the group in anticipation for the return to growth - hopefully it means the end of JQ altogether in favour of a full service airline based in both Australia and overseas (whether or not it can use the QF name remains to be seen).

Of course whether or not the future company can hold a candle to the QF of old is another story but thems the breaks in trying to make a buck in one of the most difficult industries to do so.

 

[simongr]

Personally if the future model includes crew like I experience in J/F on the A380 on aircraft of similar standard I think it blows away the QF of old... Even if it is a smaller airline...

 

[UP4014]

And whom do you suggest take his role?

Should have gone with JB shouldn't they , while they had the chance.

 

[Oneworldplus2]

Should have gone with JB shouldn't they.

Harry Hindsight is a wonderful thing.

I'm by far, no means a very frequent flyer or business analyst, but - cutting F routes, SYD centric, Jetstarisation of QF routes, expensive redemptions and very hard to get J and F long haul (~330+ odd days out to get 'some' premium seats), competitors chewing away your market share, doesn't look good.

 

[SeatBackForward]

Harry Hindsight is a wonderful thing.

I'm by far, no means a very frequent flyer or business analyst, but - cutting F routes, SYD centric, Jetstarisation of QF routes, expensive redemptions and very hard to get J and F long haul (~330+ odd days out to get 'some' premium seats), competitors chewing away your market share, doesn't look good.

Only one of those things is out of QF managements control.

 

[Oneworldplus2]

Only one of those things is out of QF managements control.

Yes, but you still have to deal with competitors no matter what.

 

[SeatBackForward]

Yes, but you still have to deal with competitors no matter what.

Well, the "competitors chewing away.." is actually not an action, but a consequence of all the others. Dealing with competitors is a part of their "business as usual" planning, nothings changed with that in the last few years. Sorry I should clarify, im not arguing against you.

 

[mannej]

Should have gone with JB shouldn't they , while they had the chance.

It is all hypothetical isn't it? Would he be able to do the job with QF as he has with DJ/VA? All a very big what if isn't it?

Not that I know the answer either.

 

[SeatBackForward]

It is all hypothetical isn't it? Would he be able to do the job with QF as he has with DJ/VA? All a very big what if isn't it?

Not that I know the answer either.

I doubt it. At DJ/VA he had the freedom and flexiblity to try different things. At QF he may have just ended up having to do the same thing AJ did/does...

 

[Jmrocky]

Telstra have been saved by NextG and competitor incompetence.

Guess who built NextG

Ericsson. Sol didn't plan for 3G, the build was starting some months after his arrival and well in the pipeline before him. I doubt he planned and organised a complete overhaul of Telstra's existing mobile network infrastructure in 4 months.

Sweep aside the 30% share dip, the failed NBN tender, the Sensis "success" and what's left might not be classed as a failure. If only all of us were judged on performance by like this....

 

[SeatBackForward]

Ericsson. Sol didn't plan for 3G, the build was starting some months after his arrival and well in the pipeline before him. I doubt he planned and organised a complete overhaul of Telstra's existing mobile network infrastructure in 4 months.

Sweep aside the 30% share dip, the failed NBN tender, the Sensis "success" and what's left might not be classed as a failure. If only all of us were judged on performance by like this....

Well if the analogy is Telstra, this would be:
1) Lowering their maintenance and capital expenditure on the copper network, and pushing customers harder onto their mobile product by reducing their options
2) Forming an entirely new business called "CutCom" or "EdgeCo"* with whole new staffing agreements, that will compete with their existing staff for maintenance of their network
3) Argue that their requirements to service regional and remote locations puts undue pressure on their business model
4) Stupid campaigns and "enhancements" that are mere cosmetic dressage: "You're the reason why we call"...
5) Debasing the value of the products and benefits they currently offer: the telco industry does this through flagfalls and minimum calling blocks..
6) Arguing that they'd be better placed if they were privatised - existing shareholders should be asking why that can't happen today.
7) Whinge Whinge Whinge about how Optus isn't under the same conditions..


(*) Ok who are the Simpsons fans amongst us?

 

[eastwest101]

My fundamental problem with Joyce is that i disagree with him on what the assets and value of Qantas are. Joyce has explicitly said that he thinks Qantas' great strength is jetstar and the ability to get capital and invest it in low cost franchises around Asia. He believes that their superior management of low cost franchises is the future of the company and that they are better at it than anyone else.

I sometimes disagree with your opinions 777 but you have certainly nailed it with that post, a rational and well argued case for what has been going wrong at Qantas under the current management.

 

[11sjw]

2) Forming an entirely new busines called "CutCom" or "EdgeCo"* with whole new staffing agreements, that will compete with their existing staff for maintenance of their network

(*) Ok who are the Simpsons fans amongst us?

Flancrest Enterprises.

 

[Mal Ware]

Qantas share price dropped 3 percent after his speech. Maybe he should keep his mouth shut, he only opens it to change feet.

 

[Paddy55]

My fundamental problem with Joyce is that i disagree with him on what the assets and value of Qantas are. Joyce has explicitly said that he thinks Qantas' great strength is jetstar and the ability to get capital and invest it in low cost franchises around Asia. He believes that their superior management of low cost franchises is the future of the company and that they are better at it than anyone else.

Alternately, he has given little or no value to the Qantas brand, to the reputation for safety and service built up over many years and to the loyalty and respect that people feel for Qantas. This is evidenced in the ways in which Qantas has plummeted down the rankings of most respected brands and companies under his tenure. This not an accident or someone else's fault this is effectively company policy to redeploy internal resources away from Qantas.

What i really think he is doing is dismantling the house of cards piece by piece and it will inevitably collapse. Ignoring the claims about Qantas actually directly subsidising jetstar, the reality is that Qantas is the thing that holds the whole thing up. Is the Qantas Frequent Flyer program profitable without a strong Qantas? How much of what drives value to jetstar are the routes seeded by Qantas, the prominent marketing on the Qantas web site and the spill over from the Qantas brand? You take Qantas out of the picture and the whole thing collapses and every thing he appears to be doing is weakening Qantas and moving towards that scenario. I don't believe they are superior managers of low cost franchises i believe they are running down the value of one asset to try and build the value of another and i'm not convinced by it as a strategy.

As folks know i'm a very active Virgin flyer and don't fly Qantas much these days. However the original reason for that is that Qantas stopped flying where i needed to go and ceded the route to Jetstar. Qantas seems to be doing this more and more and i'm sure i won't be the last individual to reach that tipping point where the whole package of Qantas has so many holes in it that i can't make it work for me anymore.

He only knows LCC.... I'll go further... I don't think he understands "full service" :evil:

 

[ChrisCunard]

Well, I hope history judges my comments incorrectly and we do see a Qantas brand still in existence.

Since Alan Joyce has taken over, International market share has dropped around 3 percentage points (only slightly above 18% now), and the share price has dropped over 30% (Virgin has gone up by 30%). Even the international market share of Jetstar is in decline. Customer satisfaction and employee satisfaction is at the lowest points in history. Yields on the domestic market are being squeezed whereas Virgin is advancing.

I am not being ignorant in my assessment of Alan Joyce. You cannot argue with facts.

I flew on DJ's gorgeous new A330... 8 people in the J cabin built for 24.

I flew home on an ancient ex BA 767 with a broken J seat and sloppy service. There were 30 full seats.

Not sure what that means but it seems to me QFd is ok for now. They just need to update their product to keep DJ at bay, because once someone try's the new DJ A332 J cabin & product it's tough to board a 763 or "Y+" A332.

 

[travelislife]

My fundamental problem with Joyce is that i disagree with him on what the assets and value of Qantas are. Joyce has explicitly said that he thinks Qantas' great strength is jetstar and the ability to get capital and invest it in low cost franchises around Asia. He believes that their superior management of low cost franchises is the future of the company and that they are better at it than anyone else.

Alternately, he has given little or no value to the Qantas brand, to the reputation for safety and service built up over many years and to the loyalty and respect that people feel for Qantas. This is evidenced in the ways in which Qantas has plummeted down the rankings of most respected brands and companies under his tenure. This not an accident or someone else's fault this is effectively company policy to redeploy internal resources away from Qantas.

What i really think he is doing is dismantling the house of cards piece by piece and it will inevitably collapse. Ignoring the claims about Qantas actually directly subsidising jetstar, the reality is that Qantas is the thing that holds the whole thing up. Is the Qantas Frequent Flyer program profitable without a strong Qantas? How much of what drives value to jetstar are the routes seeded by Qantas, the prominent marketing on the Qantas web site and the spill over from the Qantas brand? You take Qantas out of the picture and the whole thing collapses and every thing he appears to be doing is weakening Qantas and moving towards that scenario. I don't believe they are superior managers of low cost franchises i believe they are running down the value of one asset to try and build the value of another and i'm not convinced by it as a strategy.

As folks know i'm a very active Virgin flyer and don't fly Qantas much these days. However the original reason for that is that Qantas stopped flying where i needed to go and ceded the route to Jetstar. Qantas seems to be doing this more and more and i'm sure i won't be the last individual to reach that tipping point where the whole package of Qantas has so many holes in it that i can't make it work for me anymore.

That is the most well reasoned post I have seen on AFF regarding AJ. Refreshing from all the Irishman and cough CEO talk, it actually analyses AJs philosophy an the actual value o the business.