VIDEO: Alan Joyce speaks to 7.30 after Qantas announces $1.74b profit

SARAH FERGUSON:  Qantas today revealed a record pre-tax profit of $2.5 billion. It’s a remarkable turnaround.

ALAN JOYCE, QANTAS CEO:  Our financial position is the strongest it’s ever been.

SARAH FERGUSON:  The head of the national carrier said during the pandemic Qantas was just 11 weeks away from insolvency.

ALAN JOYCE (August 2020):  COVID-19 has punched a $4 billion hole in our revenue and a $1.2 billion hole in our underlying profit.

SARAH FERGUSON:  As the coronavirus surged in 2020, the airline played a key role in bringing Australian evacuee’s home.

WOMAN:  I applied for a tourist visa to bring him in so some troubles for him on board because of the travel ban.

SARAH FERGUSON:  Qantas used the pandemic to radically re-structure, shedding more than 9,000 staff.

PROTESTERS:  Sack Alan Joyce! Sack Alan Joyce!

SARAH FERGUSON:  The Federal Court later found its outsourcing of nearly 1,700 baggage handlers, cleaners and ground staff breached the Fair Work Act.

BAGGAGE HANDLER:  It was like the whole world came crashing on me.

SARAH FERGUSON:  Qantas is appealing the ruling in the High Court.

The transport union today labelled the airline’s track record on jobs in contrast to its profit announcement “shameful.”

MICHAEL KAINE, NATIONAL SECRETARY, TWU:  This is a company that has devastated, devastated working conditions.

SARAH FERGUSON:  Qantas is also facing with a class action that alleges the airline misled customers over travel credits.

MIKE HARDING:  I would take them to court, but I just don’t know how to resolve this situation.

SARAH FERGUSON:  Alan Joyce leaves Qantas in November. Today’s extraordinary results were his final presentation.

Beyond the figures, there’s another side of the airline’s transformation.

Alan Joyce’s corporate commitment to progressive causes – first same sex marriage and now the Voice.

Alan Joyce, welcome to 7.30.

ALAN JOYCE:  Sarah, it’s good talking to you again.

SARAH FERGUSON:  Now your results are out today, and we’ll come to those in a moment but I want to ask you first about the Voice because we’re about to get the date for the referendum.

You’ve directed that Qantas supports the Yes campaign. You have got a number of aircraft carrying the Yes ‘23 livery. Why is an airline business taking sides in a national referendum?

ALAN JOYCE:  Well, I think good companies should have an involvement in society and democracy and having a social conscience.

One of the big parts of companies that investors look for is what’s called ESG, the environment, social and governments. My experience in the past when we support things like marriage equality is the shareholders not only expect it, they’re demanding that you’re out there doing this and that’s part of why they’re invest in companies.

SARAH FERGUSON:  It is interesting you say that because I think the Coalition has taken a very different view. Peter Dutton has called corporate leaders backing the Yes campaign, he says they’re craving popularity. Alexander Downer, the former foreign minister said it’s just virtue signalling. What do you say to them?

ALAN JOYCE:  I say we’re part of society, companies need to be involved in this debate and companies need to get behind it.

What we find that’s very important is we think it’s the right thing to do but we also believe it’s good for businesses to do it because, one, we know that companies that have a social involvement attract more talent, more employees.

What we saw after marriage quality is Qantas went up the ratings in terms of LBGTI people wanting to work for us and in terms of young people wanting to work for us.

SARAH FERGUSON:  I remember at the time you said there was a strong business case for that. So you see a similar business case for the Voice?

ALAN JOYCE:  We do, and we see it in terms of like we have advertised for 7,000 jobs in the last year. I’ve had 161,000 people apply for the jobs.

I see it in customers. If you’re in a minority group, you’re four to five times more likely to fly with a company you regard as representing you.

If you’re a shareholder, you’re likely to invest in a company that you believe has a social activity and when you ask your employees, and we did in this case, our First Nation employees, they said they wanted and needed Qantas to go out there.

That was the number one driver for me.

SARAH FERGUSON:  Now, you’ve been called before a Senate inquiry into cost of living, I think on Monday if that’s correct, where you are going to face some questions from your political nemesis, Labor Senator Tony Sheldon.

He says that you’ve turned Qantas from being an aviation pioneer into a pioneer of corporate greed. Is that going to be your legacy in some quarters?

ALAN JOYCE:  Well, I think when you look at what we’ve done in Qantas over my time as CEO of Qantas and CEO of JetStar, we have changed the industry here in a very positive way.

Before JetStar, a lot of people that couldn’t fly, they couldn’t afford to fly. JetStar has carried 380 million people, half of them for under $100. This year alone we’ll carry nine million people for under $100. It democratised their travel, great change for the Australian community.

SARAH FERGUSON:  That leads me to a really basic question, as the CEO of Qantas, who is more important to keep happy – customers or shareholders?

ALAN JOYCE:  We keep customers, shareholders and employees and every announcement that we have done over the last 15 years has something for all of them.

Now we come out of COVID after nearly going bankrupt, being 11 weeks away from it, with the strongest balance sheet, with the strongest profitability we have ever had and the biggest investment profile we have ever had which are going to create 8,500 jobs over the next decade.

That’s what good companies do and when companies are in trouble, unfortunately they have to make tough decisions and unfortunately, we have people that don’t like the tough decisions that are needed to be made.

SARAH FERGUSON:  Okay, let’s have a look at some of these things and of course, we recognise that you have a duty to shareholders, but I want to clear this up. How much money did Qantas receive from the taxpayer during the pandemic?

ALAN JOYCE:  So the numbers that we are reporting are just $2.7 billion. But let’s break that down, Sarah, because it is important.

Of that $2.7 billion, a billion was for the government renting old aircraft. So you can imagine, borders are closed everywhere. Australian agricultural produce couldn’t get out of the country. So they hired our aircraft which incurred fuel, and in flight charges, landing charges, we had to pay the pilots and that was half a billion dollars just for the freight flights. We did 3,800.

We had another over $500 million for the domestic flights that had to operate because the borders were closed down. That was to get people between hospitals, pharmaceuticals to move around the country and it was over 30,000 flights that we operated on behalf of the government. That was another $500 million. That’s a billion.

There was nearly $900 million in JobKeeper. That JobKeeper, we stood down 25,000 people because we hadn’t got jobs for them and that went to our people. It passed through us, went to our people to help them get through.

SARAH FERGUSON:  Was there ever any consideration of repaying any of that money with the very large profits that you’re reporting today?

ALAN JOYCE:  So what happens I think, companies like us will be paying that back because as we’re making money, we’ll pay corporation tax and we’ll be getting there faster. We believe in ’25 we’ll be paying corporation tax again. We are paying other taxes like ticket tax, there is excise duty.

SARAH FERGUSON:  That’s not paying money back, that’s paying the money that you have to pay according to corporation tax?

ALAN JOYCE:  But I would say it is because the company survived, and the company got through.

SARAH FERGUSON:  But is that how much it cost to make the company survive or did you get more than it took to keep the company afloat? That’s the $60 million question, isn’t it?

ALAN JOYCE:  Again, I would say what money did the Government give that, that’s money that should be paid back. So should it be the money that they paid for the renting the aircraft? I would say no because we provided the service for the government. We incur costs to do that. You’d say that’s a billion gone.

Should our people who got the money for JobKeeper pay that back? You’d say no because that’s asking them to pay back in a difficult period of time.

So what money do we pay back exactly because all of that money went for particular reasons and it’s not this huge lump sum of a subsidy with Qantas.

SARAH FERGUSON:  Let me ask you a simple question. You have been accused of price gouging by a number of different people. A simple question – when will air fares get back to pre-pandemic levels?

ALAN JOYCE:  But on price gouging I will say the ACCC who have been monitoring us have actually declared that there hasn’t been price gouging by the airlines.

SARAH FERGUSON:  The airfares are still very high. When are they going to get back to pre-pandemic levels?

ALAN JOYCE:  So what’s happening, let me explain. There was a misconnect between supply and demand as airlines, with those aircraft parked in the desert, aircraft parked for years had to be maintained and huge maintenance needs to take place.

Airlines had to retrain all the pilots. Those A380 pilots that were driving the buses, had to go through 23 hours of simulator training to get back in the air.

So there is a log jam of getting aircraft back.

What happened is we had the desire to try and get back to 100 per cent capacity, we could see the demand and then there was a whole series of issues that meant that that wasn’t deliverable.

We had sick leave that was higher than normal. We had spare parts in the supply chain that weren’t available and aircraft going unserviceable, and we had a terrible performance at the start. We apologise for that, and we have been working really hard over the last year to get that better and it is a lot better because 11 of the last 12 months Qantas has beaten our major competitor on on-time performance and cancellation levels are lower.

Can I say, and this has been a worldwide problem with every airline.

SARAH FERGUSON:  Now another source of discontent is the way Qantas handled $1.8 billion worth of flight credits during the pandemic and in comparison to other large carriers, some of whom did a much better job. Did you make it so difficult in the hope that people would eventually just give up and yield the credits?

ALAN JOYCE:  Well, that’s again not true because the facts on that, Sarah, are that over a billion dollars has been…

SARAH FERGUSON:  Yeah, but you don’t deny the excruciating experience customers had during that period, trying to get through, trying to get credits?

ALAN JOYCE:  Absolutely and again we apologise for that.

SARAH FERGUSON:  You made a 90 second apology, I’m not saying it is nothing, but it can’t cover everything that went wrong.

ALAN JOYCE:  I think at that start, I was on radio stations and…

SARAH FERGUSON:  Yes, sorry, I was talking about the corporate video.

ALAN JOYCE:  A corporate video, I did a lot of radio, I did a lot of media. I think I did a few media conferences explaining it and we had, like I was on the top radio station here saying we got it wrong. Waiting times took over four hours for people to get through to the call centre but they were never designed for the massive amount of calls that came in.

SARAH FERGUSON:  But how come other airlines managed?

ALAN JOYCE:  They didn’t.

SARAH FERGUSON:  Well, they did. American Airlines had a call back system, they had an easy to apply credit system, for example.

ALAN JOYCE:  Well, Air New Zealand got hammered in the home market.

SARAH FERGUSON:  But there were other large carriers who did much better than Qantas?

ALAN JOYCE:  A few of the large carriers didn’t completely shut down. I think the Americans had a huge amount; the borders kept open within the States. They were in a position where they had big funding from the US government a lot more than we did.

Can I go back on the credits because it’s important thing to talk about. So what have we done? We have done now more than all of those major carriers have done because we got it wrong at the start because the call centres took too long.

What we’ve now done is we put a dedicated concierge line in. The call centre now yesterday was three minutes to get through and there is a dedicated set of experts that can help you get your credit. We have advertised in the newspapers to tell you to use your credits or get refunds.

SARAH FERGUSON:  But do you understand that the damage, you understand the damage that was done to people’s relationship with Qantas during that period?

ALAN JOYCE:  I can and you know, it is the entire aviation industry that was in this category, except for those carriers that you talked about. We recognised that Qantas has an exceptional level of expectations above the rest and that we didn’t get it right and we needed to fix it and the important thing is, we did fix it.

SARAH FERGUSON:  Now Qantas lost a court case for the illegal sacking of 1,683 workers I think is the number during the pandemic. The Federal Court found that it was illegal. Do you regret anything about that decision?

ALAN JOYCE:  Well, that is subject to a High Court case now, Sarah, which I don’t think it’s appropriate to talk about until the High Court have ruled, and I think we’re going to have and I’m happy to come back on your program and talk about when we have a final outcome.

SARAH FERGUSON:  You made an initial appeal and that was rejected including Qantas’s arguments that were rejected that needed time the decision in order to avoid the workers being able to organise?

ALAN JOYCE:  The decision from that judge was that Qantas made a decision for appropriate commercial reasons. In his mind we couldn’t rule out whether subconsciously there was a legal reason for this to happen.

We’re appealing this and it is in front of the High Court and I’d rather not talk about it because it is part of a High Court case and it’s inappropriate for us to discuss it now.

Again, I’m happy to talk about once the High Court has actually ruled on it.

SARAH FERGUSON:  Alright, we’ll come back to it. Now this question, there’s been a lot of publicity around the Prime Minister’s son being given access to the Chairman’s Lounge? I just want to ask you this question, has it always been the case that the Prime Minister’s family have access to the Chairman’s lounge?

ALAN JOYCE:  Well, Sarah again, on the Chairman’s Lounge, I can’t comment on it, either confirming or denying anything, because of our privacy issues which I legally have to uphold.

So you can forgive me for not commenting on previous members, current members and it is just very inappropriate to do this.

SARAH FERGUSON:  I understand you don’t want to talk about the individuals concerned. What’s your criteria for giving anyone access to the Chairman’s Lounge?

ALAN JOYCE:  Again, we don’t comment on that.

SARAH FERGUSON:  You have in the past. You have talked about why you give access to BHP and Rio for example?

ALAN JOYCE:  Well, we have some criteria that is very clear which is that some very large contracts that have business dealings with us become members of the lounge.

It’s very well-known that every member of parliament is a member of the lounge. So that I think has been declared in a lot of cases, but, again, because of privacy issues I can’t go into the other categories and talk about who is there.

SARAH FERGUSON:  So what you’re saying is the rationale is having a business relationship with the person?

ALAN JOYCE:  The rationale could be there for a number of different reasons and, again, I’m just not going to comment on it because I’ll start getting into privacy terms which I think are inappropriate.

ALAN JOYCE:  The market says you’re worth the amount of money that you’re paid and the bonuses you get but we started, earlier on we were talking about you fronting the cost-of-living inquiry. How do you think the general public, struggling with those costs, those pressures at the moment, look at a CEO who gets a $24 million golden handshake?

ALAN JOYCE:  Well, I think the largest part of what I get is the shares that have been granted over basically the period of time I’ve been in Qantas and those shares are granted with the expectation that they are only given if the company performs.

I’m also in a position where I’ve come from a very working-class background. I recognise the difficulties that people have with the cost of living. I had that when I was growing up.

So I do recognise that but where we are in society, there are competitions for people, for CEOs, people are willing to pay that money to get the appropriate skills but people are only willing to pay it if the results are delivered. And I think Qantas with record result, with the strongest balance sheets ever had, with returns to shareholders, returns to employees and growth going forward is in a great position and that’s why the shareholders have awarded me that.

We also are a very high paying company generally. So our non-executives on average get paid $100,000 in Qantas. We have 20 to one in terms of people wanting a job in Qantas. We give people bonuses outside of the EBA. We’re giving 11 per cent bonuses on average.

SARAH FERGUSON:  The Federal Court said you broke the law when you dismissed your ground staff. That doesn’t go away.

ALAN JOYCE:  Well, that’s subject to a High Court opinion and I believe that we will win that case but let’s see where the High Court goes.

SARAH FERGUSON:  We’ll have you on again when that happens.

Alan Joyce, thank you very much indeed.

ALAN JOYCE:  Thank you Sarah.

SARAH FERGUSON:  Thank you.