The never-ending spin that protected Alan Joyce and Qantas from reality has started to unravel

Belated it may be but Alan Joyce’s fall from grace is something to behold. 

For 15 years, he has courted power and cultivated influence, becoming one of the highest-paid executives in the land, all as Qantas operations have suffered and its reputation has been trashed.

Suddenly, the never-ending spin that often ran counter to reality and truth has unravelled, leaving the diminutive corporate pugilist alone and increasingly isolated.

Rather than a fond farewell, Joyce is facing an ignominious end.

Qantas has hit the ejector button without a parachute before his scheduled November departure.

It is a course of action the board had to consider. For as events in recent years at National Australia Bank, Westpac and Rio Tinto have shown, directors slow to act end up being shown the door themselves.

Qantas is now fighting court action on three fronts: from his workforce, his customers and a federal government agency. The only group backing him are investors, who have been on the receiving end of a vast flood of cash, courtesy of ultra-high airfares and taxpayer funds.

But even they are growing nervous.

Hailed by some in the business community for taking on the unions, it is worth remembering the airline’s actions have been declared illegal in court, a decision endorsed on appeal. Not one to shrink from a fight, Qantas now has taken the matter of its illegal sackings to the High Court.

Then there is a class action from thousands of irate consumers, stunned by what they claim is the airline’s strategy to appropriate more than half a billion dollars from cancelled flights and book it as profit.

That rapidly spreading incendiary was given an almighty leg up late last week by the competition regulator which launched its own legal action, accusing Qantas of selling tickets on more than 8,000 flights that had already been cancelled, some of them up to 47 days earlier.

If successful, and the evidence appears compelling, Qantas could be up for huge fines.

It was the aeronautical equivalent of revelations from the banking royal commission, where some of our biggest financial institutions were caught selling life insurance to dead people.

What did Qantas’ board know?

The stench had already begun to spread.

Rather than take control of the situation, immediately remove Joyce from the company and suspend any further payments to him, the Qantas board, led by Richard Goyder, stood firmly behind its embattled chief executive even as the situation deteriorated.

And deteriorate it did.

In a startling turn of events, the Australian Competition and Consumer Commission also revealed that Qantas had concealed the number of flight cancellations to federal government authorities since it relaunched.

Rather than the 4,149 cancellations it had owned up to, there were in fact almost three times that number, with the ACCC discovering more than 15,000.

Disturbingly, it appears Qantas executives were being paid bonuses linked to diminishing numbers of cancellations, a turn of events that should even jolt the normally lethargic corporate regulator, the Australian Securities and Investments Commission, into action.

But amid all the scandal, backflips, controversy, apologies and admissions the airline’s reputation had been “tarnished”, Qantas’s board last week proceeded with its plan to dish out more than $10 million in bonuses to Joyce.

For years, Joyce has proclaimed that he didn’t take any bonuses during the pandemic when airlines globally were confined to the tarmac and workers in their tens of thousands were laid off.

That’s true, kind of.

His short-term bonus was indeed scrapped. But it was replaced by what the company called a “retention payment” which was pretty much the same as his short-term bonus. The long-term bonuses weren’t scrapped at all. Instead, they were deferred, pushed back into a later time frame. Which is now.

This was all done with board approval. As was Joyce’s recent decision to sell $17 million worth of Qantas shares at a time he knew the ACCC was investigating its flight credit debacle.

It’s business as usual for Qantas flights, but the airline is facing serious questions.(Four Corners)

Shares spiralling back to earth

The pain now is rippling through the ranks of investors.

After the debacle a decade ago, when Joyce shut down Qantas in a showdown with the airline’s unions, and a follow-up disaster two years later when the carrier lost $2.8 billion trying to beat Virgin into submission, he reasoned that while you can alienate your customers and staff without too many repercussions, it’s never wise to upset the owners.

But there are limits. Shareholders have been happy to take the cash that has been rolled back to them via share buybacks and, right now, are on the receiving end of another $500 million buyback. That takes the total to $1.5 billion in the past year.

Buybacks not only are tax effective but they have the added attraction of pushing up the share price. If you are an executive with a bonus based on share-price performance, it’s an even sweeter deal. Not only are your accumulated share allocations worth even more, you’ll be entitled to more shares for hitting your targets.

Ordinarily, with Qantas standing in the market holding a $500 million buy order for its own shares, the stock would be heading towards the heavens.

But the daily avalanche of awful news accompanied by convoluted explanations, conflicting statements and ongoing concealments has seen investors head for the exits.

Despite the buyback announced less than a fortnight ago, Qantas shares have been in freefall, down 15 per cent in the past week, plunging to their lowest level in almost a year.

Qantas customers are not the only ones beginning to feel disenchanted with the airline.(ABC News: Natasha Johnson)

How much will Alan Joyce cost Qantas?

In a company that hasn’t managed to break even during his 15-year stint in the boss’s seat, Alan Joyce has done a remarkable job on the executive pay scale.

If he does make it until November, and he keeps all his entitlements, he will end up accumulating about $125 million for himself. He’s got millions of dollars more in bonuses set to flow his way if he can hold on for another 10 weeks.

With that sort of grubstake on the line, he’ll be throwing everything at it to get across the finish line.

But what will he leave behind?

The ACCC’s court action, if successful, could incur fines north of $250 million. Westpac paid a $920 million fine over breaching money-laundering laws, and CBA was forced to shell out $700 million for failing to meet transaction disclosure requirements.

Courts and regulators these days aren’t prepared to tolerate corporate malfeasance.

Then there is the bill for replacing the ageing fleet, now one of the oldest of all major airlines after Joyce continually delayed the purchase of new jets. With a potential $15 billion price tag, that is going to drain Qantas’ cash flow for years to come.

Joyce’s hand-picked successor, Vanessa Hudson, may well have been delivered the ultimate hospital pass.

But the biggest cost of all could be the loss of respect and influence in Canberra.

The Morrison government forked out $2.7 billion in taxpayer cash to Qantas with no strings attached. Half of that has been pumped straight back to shareholders, including the executives.

And now the Albanese government is under fire for its cosy relationship with Qantas after it admitted it blocked Qatar Airways from running extra flights just so it could protect the airline in a deal that screws over consumers and pushes up inflation.

The Flying Kangaroo has always punched well above its weight when it comes to lobbying. Almost every pollie in the nation sports a Chairman’s Lounge ticket which, incidentally, are selected personally by Joyce.

That suddenly is looking less like a badge of honour and more like an item of scorn.

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