Private equity bid comes back to bite Dixon

Warm, affable and self-deprecating, he's the sort of bloke men admire and women love.

But after eight years running the nation's flag carrier, the announcement yesterday of Dixon's departure date from Qantas, while expected, was expected to be a little further down the track than the annual meeting in November.

He'll leave Qantas one of the world's most financially robust airlines. He's managed it through economic downturns, terrorist attacks, SARS, the budget airline attacks and fuel shocks.

Most of America's airlines are staring down the runway to ruin. So are budget carriers, in the higher fuel environment.

So why the faint whiff that this was just a fraction too early, and that, just perhaps, the exact timing has been taken out of the hands of the chief executive?

It would be simplistic to link his departure with the hole in the fuselage of the Qantas B747 400 flight from Hong Kong to Sydney on Friday. But it is fair to say - even though it had nothing to do with maintenance - that it would have been just one more straw, and possibly the one that broke the back of the Qantas board.

Dustin Hoffman's pronouncement in the movie Rainman may have been great advertising at the time, but Qantas's perfect safety record has become a millstone around every chief executive's neck. Even with an unlimited budget, chances are a Qantas-owned aircraft, at some stage, will encounter difficulties.

The problem is that Dixon has taken on the unions - particularly the engineers over maintenance - and that has sullied the reputation of the airline. Cancelled flights, extended delays and poor ground service have infuriated customers.

Add in the lower standards clearly on display in the cabin, which have lowered Qantas's standing with travellers, and you have a recipe for customer revolt.

So why has Dixon embarked on this path?

Two decades ago, airlines were a national indulgence. Every country owned one, until they realised just how much they cost.

That's why the Australian Government sold Qantas. And that's why, for most of the noughties, publicly owned airlines simply couldn't compete with a government-funded Singapore, an Emirates or a newly enriched China. They just couldn't throw ever more money at whatever problem arose. They had to deliver results. And that meant cutting costs.

Dixon's answer was Jetstar.

And, perhaps mistakenly, the Jetstar ethos flowed through to Qantas.

The lower standards, the frustrated staff, the focus on the company rather than the customer began to filter through.

Qantas didn't seem like "home" any longer.

Perhaps all that could be excused if Dixon was just another hard-working Qantas boss coping with the near insurmountable problems of the international marketplace. But it is impossible not to hark back to his involvement in the ill-fated Airline Partners Australia takeover of Qantas as the beginning of the end of the Dixon era.

Dixon, chairman Margaret Jackson and his second-in- command Peter Gregg were all smiles on the podium that day when the $11.5 billion privatisation deal was announced. Given the riches it would have delivered them, their joy was understandable.

But the furore that followed the private equity bid - later blocked by a couple of shareholders - forever soured their reputations.

And that's why Peter Gregg, Qantas's chief financial officer, has not been appointed Dixon's successor. Gregg was a key player in the privatisation, although he kept his role very much behind the scenes.

Just who approached whom on the deal may never be known, although it was clear Macquarie Bank and the Packer family - James Packer was a Qantas director - had investigated a takeover years earlier.

Dixon and his executives were employed by Qantas shareholders to run the airline. They weren't freelance agents up for grabs to the highest bidder. They had contractual obligations to the board and the shareholders who paid them.

Qantas became the private equity high-water mark. It was one of the last debt-fuelled takeover bids. And it failed for good reason.

Had it succeeded, Qantas quite possibly now would be in the hands of receivers, with the bills being picked up by taxpayers. The major backer Allco Finance is now controlled by its bankers and fuel prices have skyrocketed.

The failed bid has at least allowed Dixon to exit Qantas gracefully, if a little early, and certainly as the most successful journalist ever to emerge from the Wagga Daily Advertiser.