Qantas investors close ranks around CEO Alan Joyce

Mr Bensan and several other Qantas investors are betting that the uproar over the airline’s prolonged reliability and service issues won’t stick to its brand in the medium term, and that return to robust profits next year. Macquarie Research forecasts a $981 million of profit in the 2023 financial year and $1.28 billion in 2024, and the shares are up 12.4 per cent to $5.09 in the last six months.

Mr Bensan used the example of supermarkets, where self-service checkouts helped cover-up any lack of any in-store staff to service customers, and said that aviation could not paint over the cracks as demand ramped up more rapidly than airlines could find staff to load, fly and unload planes.

It was also hard to predict the rapid bounce back in travel, according to the investment analyst, with no company hiring ahead of the curve to ensure it is properly protected against staff shortages and sick leave absenteeism.

“Whether it was in-sourced or outsourced, you could not protect against the labour force disruptions that occurred in the last couple of months,” Mr Bensan said.

Even so, Qantas’ reliability has regularly ranked below its competitors this year due to the staff issues, exposing Mr Joyce to criticism from customers, unions and politicians as holidays were ruined by lost baggage or cancelled flights.

In May, the airline cancelled one in every 13 flights. It was able to put to an end its run of the being Australia’s most unreliable airline in July, yet still only landed 53 per cent of its flights at their destination on schedule.

Qantas took to Twitter on Tuesday to say its on-time departure, cancellation and mishandled baggage rates had improved significantly to be close to pre-virus levels, after the ABC’s 4 Corners program raised questions about its airlines safety and reliability records in the wake of COVID-19 cost cuts.

The airline faces the prospect of further disruption as workers at one of its new baggage handling suppliers prepare to strike from later this week and in-house engineers continue industrial action amid a pay dispute.

Reports emerged on Tuesday that budget subsidiary Jetstar had half of its international fleet grounded due to engineering issues as travellers complained about being stuck overseas.

Forager Funds Management chief investment officer Steve Johnson said the problems needed to be fixed, “but I think we should have some sympathy for their predicament.”

“This is a global problem,” Mr Johnson said. “Labour supply is a huge issue all over the world and particularly in those industries that were shut down by government decree.”

“Why would someone who has found another job want to take the risk again?”

Qantas losses during the pandemic amounted to almost $7 billion, but Mr Joyce says it is on the path to a recovery and most analysts expect it to be profitable again in the 2023 financial year. It even announced a $400 million on-market share buyback citing the strength of the balance sheet in August.

White Funds Management boss Angus Gluskie said Mr Joyce had earned the right to try and turn the ship around.

“There is a good level of confidence in him and I think shareholders are comfortable with him,” Mr Gluskie said.

“Against that, we do understand that consumers and customers have a different set of things that are important to them … they are also important considerations, but they do have to balance customer needs and how they can deliver them in a commercial advantageous manner.”

He said Mr Joyce and Qantas had up until now down a good job of balancing customer and commercial priorities, though would have to find a solution to the staffing issues quickly.

“I can appreciate that the business is at its most sustainable if it responds to consumer needs for an improved traveller experience and that is the challenge over the next period. But I don’t think I’d pre-judge him on that,” Mr Gluskie said.

Qantas shares finished 0.4 per cent down to $5.09 on Tuesday.