Sunday, February 1, 2015

Mayday: How Warring Egos Forced Qantas Off Course

Most Australians have a view about Alan Joyce, the current CEO of Qantas. He's either a fucking little Irish runt who's sapped the life out of a 90 year old iconic Australian-owned airline, or a smart energetic leader unafraid to take on the huge task of dragging a failing company into the 21st century.

During my reading of journalist Matt O'Sullivan's absorbing new book I veered from one extreme to the other, but by the end I was neither. I was sort of stuck in the middle, having developed a lot more respect for airline CEOs trying to operate successfully today in a crazy, endlessly battered industry.

At the young age of 42 Joyce succeeded a much older and more experienced Geoff Dixon who was CEO in the early 2000s. Dixon had it good. The 2001 collapse of Ansett early in his term handed Qantas a 90% share of the Australian domestic market on a platter and enabled it to book strong and steady profits for a decade. Joyce on the other hand had to immediately confront the global financial crisis in 2008 which blew away so much highly profitable corporate travel; had to contend with the freeing up of the Australian market for foreign airlines, particularly low cost Middle East and Asian giants; had to fight off an emerging Virgin Airlines which was majority owned by cashed up and hungry giants like Singapore Airlines, Etihad and Air New Zealand; had to deal with record high oil prices; and had to wrestle with the Qantas Act, a regulatory framework that limited foreign investment to 49%. 

Qantas was being hammered on all fronts. How Qantas management dealt with all this is a business story with many dimensions - strategic, financial, operational and political. Not the least of these is the disastrous industrial relations drama that Joyce engineered in October 2011 when he suddenly grounded the entire Qantas fleet, stranding 100,000 passengers around the world, all because he couldn't negotiate a successful outcome with a range of union leaders representing ground staff, engineers and pilots. It was the 'thermo-nuclear option' and was a kick in the face to loyal customers, many of whom have never flown Qantas since. 

O'Sullivan is a senior business journalist for Fairfax and has reported on Qantas and the airline industry for decades. His book is full of behind-the-scenes detail and drama as he's obviously had access to countess insiders over the years. 

If you're into business books, as I am, you will enjoy this well-written and researched tale immensely.

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