Three years ago, Qantas A380 planes were gathering dust in the Mojave Desert in California with the national carrier on the brink of bankruptcy.
Key points:
- Alan Joyce said Qantas has recorded its strongest profitability ever
- Mr Joyce says companies like Qantas will pay more taxes as they make more money
- He said Qantas’ support of the Voice Yes campaign is about good business
On Thursday, the airline unveiled a record pre-tax profit of $2.47 billion, partly fuelled by sky-high demand for domestic and international travel.
“Now we’ve come out of COVID after nearly going bankrupt, being 11 weeks away from it, with the strongest balance sheet with the strongest profitability we ever had, and the biggest investment profile we’ve ever had,” CEO Alan Joyce told 7.30.
“That’s what good companies do.”
At the height of the pandemic, Qantas received around $2.7 billion in government funds.
The then-Morrison government hired part of the Qantas fleet to keep some services operational – such as interstate patient transport, medicine delivery and sending agriculture products overseas.
“A billion was for the government renting our aircraft,” Mr Joyce said.
Qantas also qualified for the Morrison government’s JobKeeper subsidy and Mr Joyce says the company used the scheme for 25,000 of its workers at a cost to the taxpayer of $900 million.
“We had some pilots that were driving buses in Sydney … this was the money to help them get through [the pandemic] due to no fault of their own. They hadn’t got an income coming in, because we couldn’t pay.”
Qantas was also the beneficiary of other federal and state initiatives to keep aviation viable.
Despite posting a record profit, Mr Joyce says there’s no reason for Qantas to repay the funds.
“I would say what money did the government give that’s money that should be paid back?” he said.
“So should it be the money that … they paid for the renting of the aircraft?
“I would say no, because we provided the service for the government and we incurred costs to do that.
“Should our people who got the money for JobKeeper pay that back? And you’d say no.
“All of that money went for particular reasons.”
He believes the best way for Qantas to repay the money is by earning higher profits and therefore paying more tax.
“As we’re making money, we’ll pay corporate tax, and we’ll be getting there faster,” he said.
Mr Joyce said he believed Qantas would be paying corporate tax again in 2025.
Travel credits trouble
During the pandemic, Qantas issued travel credits to passengers unable to travel due to border closures and restrictions.
But three years on, many still find it difficult to use the credits they purchased or acquire refunds.
The scale of the problem is such that a class action was lodged in the Federal Court this week.
Mr Joyce acknowledges the company could have done better by its customers but says Qantas is now providing more options than any of its competitors to spend or retrieve travel credit.
“We didn’t get it right, and we needed to fix it. And the important thing is, we did fix it,” he told 7.30.
“Because since March 2020, we’ve had $3 billion of refunds being given. We’ve only got $370 million of credits left.”
Sky-high airfares
Record corporate profits in a cost-of-living crisis are rarely celebrated by consumers, especially when customers feel the cost of airline tickets are unreasonably high.
Mr Joyce maintains airfares are coming down.
“There was a misconnect between supply and demand,” he said.
“There was a log jam of getting aircraft back.
“They [airfares] are coming down rapidly. They are there domestically. They’ve dropped in the last six months by 11 per cent.”
In an interview with 7.30 earlier this week, Flight Centre chief executive Graham Turner said the average cost of flights to Europe was still 50 to 70 per cent more expensive than before the pandemic.
Mr Joyce said things are about to change in the international market too.
“Capacity is the solution to that and it’s coming back rapidly,” he said.
“We’ve got the aircraft, we’ve got the people to fly them, we’d rather have them in the air earning revenue and our costs would be coming down.”
Qatar dispute
Earlier this year, Qatar Airways sought to increase the number of flights it operates into Sydney, Melbourne and Brisbane.
But the federal government rejected the proposal.
Last year, Qatar Airways CEO Akbar Al Baker said Qantas had deliberately restricted capacity to keep its ticket prices artificially elevated while also benefiting from government subsidies.
“Qatar and the CEO of Qatar is famous for saying things that are probably inappropriate,” Mr Joyce responded.
“I think he said no woman could ever run an airline here in Sydney.”
Mr Joyce rejected the Qatar CEO’s criticisms, saying the international aviation market is extremely competitive.
“If we don’t add capacity fast enough, our competitors will take our market share. So, there’s every incentive for us to add capacity as fast as possible. And that’s what we’re doing. So those accusations are just completely wrong.”
Chairman’s lounge controversy
Mr Joyce refused to comment on reports Prime Minister Anthony Albanese’s son had been granted access to Qantas Chairman’s Lounge, including whether it was common practice in the past to give access to members of a prime minister’s family.
“I can’t comment on it, either confirming or denying, I’d say because there are privacy issues which I legally have to uphold,” he told 7.30.
Mr Joyce said there are instances where large clients of Qantas automatically get access to the lounge, as well as every member of parliament, but said there were other categories for membership that he would not discuss.
Voice support flying high
Earlier this month, the national carrier formally announced its support for the Yes campaign in the Voice referendum.
No campaigners were quick to condemn the move, with federal Opposition Leader Peter Dutton accusing corporate supporters of the Voice as craving popularity.
Mr Joyce said his number one driver was the wish expressed by Qantas’ First Nations employees “to go and help them”, but said it was also good business.
“I think good companies should have an involvement in society and democracy … one of the big parts of companies that investors look for is what’s called ESG. It’s the environment and social and governance,” he told 7.30.
“My experience in the past, when we support things like marriage equality, is the shareholder is not only expected to demand that you’re out there doing this [but it’s also] part of why they invest in companies.”
Mr Joyce is reported to be leaving Qantas with a $24 million golden handshake. But first, he has to front a Senate inquiry on Monday into cost-of-living pressures.
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