Month: August 2022

It is a stunning reversal for Mr Joyce, 56, who won the devotion of shareholders by resurrecting Qantas twice in less than a decade through a series of ruthless job and spending cuts. He is perhaps the nearest thing in Australia to a celebrity CEO.

None of that seems to matter to passengers who have endured hours-long check-in queues, especially during peak holiday periods, or slept rough at foreign airports after flight delays. Qantas canceled 8.1 per cent of domestic services in June, the latest available government data show. Some luggage has gone missing for weeks.

Joyce’s plan to stay on now at risk

Mr Joyce has been at the helm of Qantas for so long – almost 14 years – that he is seen as the face of its current ailments. For years the industry’s golden boy, Mr Joyce is now hostage to the travel chaos that is dogging most airline CEOs. His plan to stay on until at least the end of next year is at risk of turning into a hastier exit.

While airlines all over the world are struggling with the post-pandemic recovery, Qantas is in a somewhat unique position. The intensity of the revival in travel demand seems to have taken it by surprise. Australians barred by the government from traveling overseas for almost two years are now lining up to leave, and pandemic restrictions on traveling within the vast continent have also been scrapped.

Qantas’ dominance of the Australian market – it carries about 65 per cent of domestic passengers – and Australians’ affinity for their national carrier, which calls itself “The Spirit of Australia”, have made the cancellations and delays all the harder to stomach for disgruntled customers. They expect their loyalty to be rewarded with reliable service.

The antagonism aimed at Mr Joyce also has a uniquely Australian flavour. He is wealthy, openly gay and Irish, all attributes that make him a target to certain elements of the population. On Twitter these days, his surname of him is a byword for a journey that has gone awry.

‘Alan Joyce should move on’

“The reputational damage is enormous,” said Natalie McKenna, a lecturer in strategic communication at La Trobe University in Melbourne. “Many Australians are of the opinion that Alan Joyce should move on.”

Qantas survived the pandemic thanks in part to the elimination of more than 8,000 jobs and a multibillion-dollar cost-slashing program. Those cuts provide ammunition to critics who say Mr Joyce has gutted Qantas so comprehensively it cannot function now that demand has returned.

In a note to staff on Wednesday, Mr Joyce said Qantas would return to pre-COVID standards “over the next couple of months”. The airline has hired more than 1500 workers since April, most of them in operational roles. With sick leave 50 per cent higher than normal, Qantas was also cutting its domestic schedule, he said.

A spokesman for the airline said Mr Joyce would not comment on the criticism, and pointed to the backing of Qantas chairman Richard Goyder. “Alan is a superb CEO,” Mr Goyder said last month. “To come through the way we have financially is quite remarkable and a credit to his leadership from him.”

Whatever Mr Goyder’s assessment, the airline’s outsourcing of about 2000 ground handlers in 2020 has come back to bite Mr Joyce in particular. A court subsequently found the move was illegal, making it easy for opponents to blame the current operational dysfunction on the unlawful sackings.

Head office staff are having to lug suitcases

While Qantas is appealing the ruling, a ground-crew shortage persists. The airline is so desperate for baggage handlers, it is sending head office staff to lug suitcases full time at Sydney and Melbourne airports for the next three months, according to an internal appeal to managers.

Tony Sheldon, a former Transport Workers’ Union head who is now an Australian government senator, said Qantas’ performance had become a drag on the economy and Mr Joyce should step down immediately. “Things have to change and someone has to be held to account,” Mr Sheldon said in an interview. “Qantas’ reputation has been Joyced.”

In a rare snub from the financial community, Citigroup analyst Samuel Seow last week cut his rating on Qantas to sell, citing the cost of fixing the continuing labor and flight issues.

Mr Seow estimated Qantas is canceling 8 per cent of its flights, quadruple the rate of US airlines and higher than the 6 per cent at Australian peers. About 46 per cent of Qantas flights are also delayed, more than double the figure in the US and worse than the 38 per cent among Australian airlines, he said. Qantas would need to spend more on staffing and stop back schedules, Mr Seow said.

Still, for now, Mr Joyce has a key constituency on side: Qantas’ investors. Shares in the airline – known globally for its stellar safety record – have more than doubled from lows reached at the start of the pandemic, when air travel was in effect paralyzed. The stock should deliver a further 32 per cent return in the next 12 months, based on the forecasts of analysts tracked by Bloomberg.

Joyce not known for bowing to criticism

“Shareholders are probably happier than customers at the moment,” said Sean Fenton, founder and managing director at Sage Capital in Sydney, which oversees more than $US700 million ($989 million) of assets including Qantas stock. “If Alan suddenly left you’d get a pretty negative reaction in the share price. He’s added a lot of value over the years.”

As long as Mr Joyce is delivering profits, he is unlikely to come under pressure to quit, Mr Fenton said. Qantas has said it expects to return to an underlying profit in the year ending June 2023.

Nor is Mr Joyce known for bowing to criticism. In 2011, he grounded Qantas’ entire fleet worldwide to tackle a labor dispute at home, a decision that left 80,000 passengers stranded and one that still ranked union opponents. In 2017, Mr Joyce had a foot thrust in his face during a speech in Perth because of his support for Australia’s campaign to legalize same-sex marriage.

Mr Joyce’s record means there is a line of people who might have a motive to vandalize his house, but a police investigation has failed to find the culprit. “The case will remain closed unless further information is provided,” the police said in a statement.

At Mr Joyce’s waterside residence, from where the Sydney Harbor Bridge peeks over the horizon, there’s now little evidence of the night-time egg and toilet paper attack.

But even the Australian Shareholders’ Association, a retail investors group not known for pushy activism, wants Qantas directors to start talking about life after Mr Joyce at the airline’s annual meeting on November 4.

Rachel Waterhouse, the association’s CEO, said in an interview: “We would be asking those questions: What is your succession plan? That’s a challenge when the CEO has been there for a long time.”

Bloomberg

ABB country human resources manager Beverly Stacey said despite the surge in cases last month, staff were keen to get back to the office on their nominated days.

“Within those teams, about 90 per cent of them would come in, there were only a few who were a bit nervous being in the same space with all the germs around,” she said.

“Seriously, they’re a very social bunch, and they just wanted to be together.”

Employers in some cities were urged to reconsider work-from-home arrangements amid last month’s surge in COVID-19 cases.

ABB ordinarily requires employees to attend the office twice a week for in-person team meetings, but day-to-day decisions around office attendance are usually up to staff members.

“It’s a bit hectic keeping up with government guidelines,” said Ms Stacey, who works in Melbourne.

“I feel sorry for our safety people – it’s a full-time job in itself, but we’ve reached a point though where it’s in the hands of our employees. We do everything safely and if somebody doesn’t feel safe coming to work or if they’re unwell, they don’t.

“We’re all in this together.”

Lucy Carruthers from ARM Architecture said staff stayed away from the office as COVID-19 cases rose, but generally not for long periods.

“The gravitational pull back into the office has been quite strong,” she said.

“My observation is that the occasions in which people get most nervous about being in the office is when they have an event that depends on staying well, such as upcoming travel, or a major personal event such as getting married. In that instance, we find that people will stay away or are just more diligent about wearing masks.

“Our profession really benefits from working together in the same place – whether that’s being on-site, physical drawing or model building, reviewing samples and meeting together.”

hybrid expectations

Danny Lessem, chief executive of human resources software company ELMO, said employees increasingly wanted hybrid work conditions.

“It would be too reductionist to say ‘well it’s just an upsurge in COVID, people are staying away’, employers have to recognize that there’s a new expectation from office workers to have further flexibility,” he said.

“This move to hybrid is just not a COVID thing, it’s becoming a standard expectation.”

Mr Morrison said low office occupancy rates should be considered an important factor for authorities in their pandemic management strategies.

“The good news is the mandates of 2020 and 2021 are well behind us and I think governments are unlikely to go back to directing people to work from home,” he said.

“I think what’s important for governments is to recognize that when they’re considering how best to manage these pandemic surges that they recognize that work from home is not a zero cost exercise.

“There is a cost – it’s not the office landlords, and it’s not the office tenants, it’s the retailers, and cafe owners and restaurants and their employees who are reliant on the office workers for their customers.”

Mr Morrison was hopeful the office recovery could resume amid indications the winter omicron wave had peaked and with spring approaching.

“Better weather is not only good for the pandemic, but generally puts a spring in people’s step as well and is likely to mean that people will be looking to come back to the office in greater numbers,” he said.

“I would hope from August and September onwards, we get back on the momentum train, and we start seeing occupancy build again across our key capitals.”

Despite the effects of the pandemic and a drop in occupancy, the Property Council’s latest office market report reveals businesses have leased more space across the country’s CBDs over the past six months, with demand increasing by 0.5 per cent.

Communications Collective founder Genevieve Brannigan said the agency was seeing a strong desire from predominantly Gen Y and Gen Z teams to work from the office.

“They have a thirst for connection and seem unknown by the current wave of COVID,” she said.