Qantas to outsource ground handling across Australia

[Must...Fly!]

Reduce cost by outsourcing to who/m, probably Dnata, and they (Dnata) are also saying they will let go a lot of their staff and sell off their baggage handling equipment.
If Dnata is reducing staff, and QF is reducing staff, the end result will be longer wait times at the baggage carousel.
Ergo, us/we the people who choose to fly QF will "suffer".
I don't use my plane hold allowance, as I am HLO, but others will.
Also, with all these cost reductions, do our QF airfares go down that much, don't think so.
So, in the end, its all to do with profits.
We just can't win from this, either way, its a lose lose.

I doubt there will be longer wait times. Any contract to any company signed by QF will have strong performance clauses and requirements. You might even find service improves...

 

[p--and--t]

The information was released by Qantas itself, here: QANTAS GROUP FY20 FINANCIAL RESULTS – NAVIGATING EXCEPTIONAL CONDITIONS

GOVERNMENT SUPPORT​

​

The Group acknowledges the significant industry assistance provided by the Federal Government in response to COVID, reflecting the importance of aviation to the broader economy.​

​

As one of the most heavily impacted companies, the Qantas Group collected $267 million in JobKeeper payments, the majority of which was paid directly to employees on stand down and the rest used to subsidise wages of those still working.​

​

Qantas and Jetstar operated a series of domestic, regional and international flights on behalf of the Federal Government, as well as some freight services, to maintain critical links that had been made commercially unviable by travel restrictions. These flights were operated on a fee-for-service basis, with fare revenue offsetting the cost to the taxpayer.​

​

To 30 June 2020, the total gross benefit of Government support was $515 million and the net benefit (after costs for flights operated) was $15 million.​

​

The nature of ongoing industry assistance means the level of support received in FY21 will depend on the amount of flying activity.​

To me that looks like they have taken $15 million of taxpayer money for their profit?If they'd made million over what they estimated, perhaps fair enough, that could allow for them making some unexpected extra cash. But $15 seems somehow they got the estimates/quotes a bit skewed.

Thanks for that. That's good to read.

They made a small 2.9% profit. Sounds like their cost calculation algorithms are fairly close to the mark given all the variables in an uncertain environment and they didn't make a loss detrimental to their already bad situation but did not extort anyone.

Businesses are not in business to make a loss.

Post automatically merged: Aug 27, 2020

Fair enough but he has poor form in the past eith sacking people because of costs but not cutting his pay. Sure he runs an airline but what doed he do exactly? I am sure he has many senior managers contributing.

I've not come across a public company where the CEO sets his own salary. Certainly not aware that AJ set his own salary at QF.

 

[hm520]

My take is that it will a $100 million saving on the payroll, but that will be offset by a $110 million per year oursourcing cost.

Isn't that the modern corporate neoliberal approach? outsource and remove guaranteed costs, but blow your budget on subbies filling the gap (but of course the right hand doesn't talk to the left).

 

[jakeseven7]

Isn't that the modern corporate neoliberal approach? outsource and remove guaranteed costs, but blow your budget on subbies filling the gap (but of course the right hand doesn't talk to the left).

In poorly run companies sure. But they can also poorly run in-house units/resources as well.

 

[RAM]

Thanks for that. That's good to read.

They made a small 2.9% profit. Sounds like their cost calculation algorithms are fairly close to the mark given all the variables in an uncertain environment and they didn't make a loss detrimental to their already bad situation but did not extort anyone.

Businesses are not in business to make a loss.

If you deduct the QFF income & profit (earnings not strictly due to the airline operating) then the figures look much less acceptable over the last 7 or 8 years.

More to come...

I've not come across a public company where the CEO sets his own salary. Certainly not aware that AJ set his own salary at QF.

Well now that you mention it....

The harsh reality is that most CEOs have a very strong input into who gets invited onto their company's board (as well as deciding on the board's remuneration & other compensation). It is a symbiotic relationship - you scratch my back....

True, the Board has normally 2 or 3 members who make up the remuneration committee responsible for rubber stamping the proposed remuneration for the senior execs. Mostly the recommended amounts come from an external consultant's report.

Who normally hires the external consultant or at least has a strong hand in the choice? Yes, you guessed it. The CEO. Sometimes it is the head of HR who appoints them, and who does the head of HR report to?

In one case in the late 1990s, the board's minute (from a certain company) about setting the senior execs remuneration hurdles contained two unusual phrases that just happened to only be used by the CEO.

That company went bankrupt less than two years later (luckily).

 

[MEL_Traveller]

@p-and-t... maybe the government should have gone out to tender with a clause to say no net profit from running state funded services. I really can’t see why taxpayers should be expected to give that money up. I mean, what’s in it for me, personally?

@mustfly.... lol... service agreements? Like we have for call centres? Three hour waits, pre covid, don’t set a good example of how this if going to work

 

[p--and--t]

@p-and-t... maybe the government should have gone out to tender with a clause to say no net profit from running state funded services. I really can’t see why taxpayers should be expected to give that money up. I mean, what’s in it for me, personally?

@mustfly.... lol... service agreements? Like we have for call centres? Three hour waits, pre covid, don’t set a good example of how this if going to work

Are there any contracts for any industry with any government which say a service must be delivered at zero "profit" - even charities "profit" from services delivered so they can use the funds elsewhere. Dreaming I think.

Playing devil's advocate - For the top-down "Reaganomics" followers (I'm not), as I understand it, that's the sort of action they require, trickle down from government to corporations to suppliers/staff to stimulate the economy

 

[AIRwin]

@mustfly.... lol... service agreements?

I know SQ had SLAs with their ground handling agents...

 

[Seat0B]

If you deduct the QFF income & profit (earnings not strictly due to the airline operating) then the figures look much less acceptable over the last 7 or 8 years.

Which makes @dajop's "announcement" at post #33 upthread all the more plausibly dystopian IMO.

 

[MEL_Traveller]

Are there any contracts for any industry with any government which say a service must be delivered at zero "profit" - even charities "profit" from services delivered so they can use the funds elsewhere. Dreaming I think.

Dreaming maybe. But I don't like the sound of making $15 million of taxpayer money.

 

[justinbrett]

Dreaming maybe. But I don't like the sound of making $15 million of taxpayer money.

As opposed to losing billions due to government actions.

 

[MEL_Traveller]

As opposed to losing billions due to government actions.

I dunno if that's actually true? In the US there didn't seem to be many restrictions, yet airlines took a massive hit regardless.

 

[Must...Fly!]

I know SQ had SLAs with their ground handling agents...

As do Virgin Australia with theirs which are regularly audited.

No company is signing an agreement worth tens/hundreds of millions with no guarantees.

 

[phez]

Good thing he's working for free then...

Not true. #fakenews

 

[Melburnian1]

..My take is that it will a $100 million saving on the payroll, but that will be offset by a $110 million per year oursourcing cost.

The '$100 million' in 'annual operating savings' comes to about $42000 per annum for each current employee.

This must mean fewer ground handling contractors to be employed. What (with penalties, allowances etc.) would the current company-engaged baggage handlers be on per annum (typically)? I'm guessing $75-80000 pa gross?

Surely many ground handling activities can't be automated much more. Perhaps there are rostering inefficiencies with staff (as distinct from soon to appear contractors) or quirks in the awards that increase costs to QF but beyond that, not much.

 

[TheInsider]

This must mean fewer ground handling contractors to be employed. What (with penalties, allowances etc.) would the current company-engaged baggage handlers be on per annum (typically)? I'm guessing $75-80000 pa gross?

QGS employees are on around $22.13hr
Morning shift: 20% loading
Afternoon: 15%
Night: 22.5%
Saturday: 50%
Sunday: 100%

FAR from $75k a year, especially since majority are part-time,

It was said by a local manager that they would be saving over "$80 million on equipment capex costs by outsourcing",.

 

[travelislife]

Qantas has announced it will cut a further 2400 jobs and save $100 million pa by outsourcing baggage handling, aircraft tugging and aircraft cabincleaning at major airports across Australia

Qantas set to cut another 2400 jobs by outsourcing ground handling

A fresh round of redundancies has taken the total number job losses at Qantas in response to COVID-19 to 8500, or close to a third of its pre-pandemic workforce.

www.theage.com.au

I actually don’t understand how they could realise an annual $100m saving to get the same service they need? The only way that is possible is if it was so poorly managed that a Contractor will do a more efficient job. Just doesn’t make sense.

They may realise a saving to this level this FY, but that’s because they don’t need the service when their planes aren’t flying!

 

[jb747]

Isn't that the modern corporate neoliberal approach? outsource and remove guaranteed costs, but blow your budget on subbies filling the gap (but of course the right hand doesn't talk to the left).

Yes, but it also seems include the corporates concerned being owners/shareholders of the company that takes the job over.

 

[AustraliaPoochie]

A bit of O/T
>Its not only pay that QF will not have to bear, once they outsource.
No workers comp, no super, no payroll tax, not future holdings for annual leave, or long service leave, etc.
It all adds up.
They just have to pay the main contract holding company that set fee, and thats it.
Its the same with bus companies all over Aust, that are still owned by the state govt, but the drivers are outsourced, QF in the case of OP and QF, is that they will still have ultimate control, but they can wash their hands off the daily cost of running the side business, or as they call it, "non core activities".
As crooked as it can be.
As in school cleaning too, you have to do all the work, but get paid a pittance, imagine having to close windows, turn off lights, lock doors, etc, which are non core activities to the company/paying organisation, but if you don't do these, you get told off.
But if the night guard finds something open, window or door, or an alarm caused by the cleaner, they get their pay docked.
If a QF ground handler, once the contract is outsourced, is injured, QF can easily wash their hands off the matter, saying its up to the contract holder and the SWprocedures.

 

[33kft]

It was said by a local manager that they would be saving over "$80 million on equipment capex costs by outsourcing",.

By replacing them with higher opex spending through outsourcing? I've never fully understood the vehement opposition to capex investment by (in particular, technology - as that's my world) companies - I understand leasing or services provide easier budgeting by paying costs pro-rata, but this is at the expense of depreciation, equity and services margin. Not to mention lowering the barrier to entry for competitors who have access to the same shared services.

That said, it certainly helps during a 1 in 100 year global pandemic in that you can cease to honour your agreements, but more than likely comes back to bite in terms of higher margins on services for the other 99 years - for those outsourcers who survive the year, anyway.