THE DISTILLERY: Air apparent
Jotters spot a succession plan in Qantas' management restructure, while Marius Klopper's words on copper get another look.
The Age’s aviation writer Matt O’Sullivan says Joyce made it absolutely clear that he is not thinking about retirement yesterday, by pointing out that his predecessor Geoff Dixon didn’t give it up until he was 70.
"But with Joyce approaching almost four years in the top job, it is clear the airline's board has made a call that it is time to start thinking seriously about succession planning. That much was evident in the latest shake-up, which gives the leading internal candidates for chief executive – Hickey, Jayne Hrdlicka and Lyell Strambi – new empires to run. Hickey, the boss of Qantas' biggest money spinner, the Frequent Flyer division, is seen as the man most likely to take over from Joyce when the time eventually comes for a changing of the guard.”
The Australian’s Steve Creedy says Joyce will be hoping that Hickey’s magic fingers work on the company’s international arm which is bleeding money.
"Initial market and analyst reactions yesterday appeared to back Hickey's appointment and the general thrust of the Qantas restructuring. But Hickey knows there is no silver bullet to the problems facing Qantas International, not the least of which is competition from Asian and Middle East carriers. He indicated yesterday that he would be following the airline's four-pillar strategy as he tried to drag the airline from an annual loss of more than $200 million to break-even in three years and returning its cost of capital in five years.”
The Australian’s John Durie writes that Hickey’s appointment isn’t surprising given the job he did with Frequent Flyers, but the elevation of Hrdlicka is striking as she doesn’t have experience selling tickets. Although the writer adds that the now departed Bruce Buchanan, who is a big loss, was in the same position when he came on board.
"Joyce is selling the change as a move to make the company more transparent, which is, of course, what Geoff Dixon did in a less dramatic way when he was tossing up selling off the bits and then looked at a management buyout. Management numbers will be shaved a touch with Buchanan and Rob Gurney leaving and no separate strategy person. But expect full transparency on Qantas International in an attempt to highlight the losses and smooth through any changes. Next step on the Qantas whirlwind is a lot of noise about winning the Fortescue corporate account and some $70 million in business.”
While some media reports have described the restructure as "shocking,” Business Spectator’s Stephen Bartholomeusz says it’s actually a very reasonable move.
"The radical management restructuring Qantas announced today is actually quite conventional. It’s the existing organisational structure that is unconventional. Today Qantas’ aviation brands are managed in two broad streams, operations and commercial, rather than as distinct business units. That diffuses responsibility and accountability and makes it quite difficult for external analysts to come to precise conclusions about the performance of the individual brands. It also breeds cynicism. Qantas’ employees have, for instance, been sceptical about Alan Joyce’s assertion – the foundation for his argument is that Qantas International needs major surgery – that the international business lost $216 million last year. They’ve also been suspicious about the potential for cost and revenue shifting between the Qantas and Jetstar brands.”
Sticking with company news, The Australian’s Barry Fitzgerald points out that BHP Billiton's Marius Kloppers got no attention last week for his statement that the global copper market faces a prolonged period of under-supply. Elsewhere in mining, The Australian Financial Review’s Matthew Stevens continues to rally against the decision to suspend the environmental approval process into Rio Tinto’s South of Embley bauxite project. Meanwhile, The Australian’s Bryan Frith looks at the bizarre situation unfolding between Minemakers and UCL Resources, with both companies bidding for each other in order to win outright control of the Sandpiper marine phosphate project off the coast of Namibia.
In banking, The Sydney Morning Herald’s Elizabeth Knight suggests that the market hasn’t quite appreciated National Australia Bank’s rerisking under chief executive Cameron Clyne. The Age’s banking writer Eric Johnston believes that several Middle Eastern and Asian banks have begun the long process required to obtain an Australia banking licence.
The AFR’s Chanticleer columnist Tony Boyd sifts through the pieces left over from the dismissal of Boral chief executive Mark Selway. And Fairfax’s Insider columnist Ian McIlwraith says the decision by the Financial Services Council to (belatedly) weigh in on the ASX’s proposal to loosen up capital raising restrictions for smaller companies could halt the exchange’s move.
The Age’s economics editor Tim Colebatch says the Organisation for Economic Co-operation and Development is putting a bit of pressure on Europe to prioritise growth over austerity. The same newspaper’s Malcolm Maiden tries to figure out why Australians are so worried. In doing so he produces a list that includes a lack of confidence in federal government, negative media reporting, the two-speed economy, changing work practices and slippery house prices.
And in budget reflections (yes, they’re still going) The Sydney Morning Herald’s economics editor Ross Gittins makes the astute point that only people in the top 1 per cent of income earners that also have enough left over to contribute more than an additional $25,000 a year to their superannuation can feel "dudded” by the latest budget. Gittins’ counterpart at The Australian, David Uren, argues that the budget simply ignores international economic risks. And the economics editor over at the AFR, Alan Mitchell, says the federal government decision to ease the assets test for the unemployed and add an extra $4 a week allowance won’t stop concerns being raised by the welfare lobby, as Newstart Allowance recipients are sitting on the poverty line.