THE DISTILLERY: Qantas crunch

Jotters pick apart Alan Joyce's decision to part with Tourism Australia, with one saying it was simply an act of petulance.

Qantas Airways chief executive Alan Joyce is known as a man of action. But has he overreacted to agitations from former boss Geoff Dixon by cancelling a $44 million contract with Tourism Australia, where his predecessor is chairman?

First of all, The Australian Financial Review’s Michael Smith points out that the biggest loser in this battle is Australian tourism. The Australian’s John Durie says the only winner from the Qantas decision is Mark Carnegie, who has "superbly positioned himself”. The writer says the act of "petulance” from Qantas doesn’t serve the company’s long-term interests.

"Last week it was clear Carnegie's team had neither the outside support nor financial backing to press any claims against Qantas, and as such were seen by the market as an interesting irrelevance. Just why Joyce could not put it in the same basket beggars belief and surely says something about the pressure he is under, what with Virgin getting its act together and the state of flux of the industry. He should know his best defence is performance and, sadly, his actions portray a man who is getting increasingly angry with the constant niggling from his predecessors. One can have sympathy for his position, but then Joyce earns fixed pay of $2.1 million-plus to handle such pressures and should simply ignore it and not use the brand to display his sensitivity.”

The Distillery must point out that it’s easy to say the best defence is performance when you’re not working in the aviation industry, where survival is no easy task. Business Spectator’s Stephen Bartholomeusz appears somewhat in agreement with this point when he addresses the question of why Joyce would be willing to give his antagonists undue recognition.

"The only conclusion to draw is that he and Qantas believe that investment banker Mark Carnegie, former Qantas chief executive, Geoff Dixon, adman John Singleton, former Qantas chief financial officer (and current Leighton CFO) Peter Gregg and retailer Gerry Harvey pose a threat to his position and Qantas’ strategy. He wants to burst their bubble before it has a chance to swell and create some pressure on them to put up or shut up rather than have to live with them sniping from the sidelines over a protracted period during which, given the nature of the airlines industry, something could happen to make Qantas more vulnerable to the activists than it is today, where it has broad shareholder support for its strategies.”

Durie is right when he says there isn’t a lot of support for a Dixon push on the register. But Bartholomeusz is also correct to say that Qantas is in a delicate position, despite the apparent support for Joyce.

Fairfax’s Adele Ferguson says Joyce’s greatest problem is that Dixon hasn’t shown his hand yet.

"Nor has he stated publicly that he is agitating for change. The upshot is it is a bit of a stretch and an overreaction on Qantas' part to call it a conflict… But Joyce's tactic has worked thus far. Besides grabbing headlines, it forced the board of Tourism Australia to hold a lengthy meeting to discuss how to handle the extraordinary turn of events.”

The Australian Financial Review’s aviation and tourism writer Andrew Cleary adds that you need to give Joyce credit for having the courage to take action.

"He isn’t afraid to put his money or his airline where his mouth is. Last year, the Qantas chief grounded the entire mainline fleet, an unprecedented move that was instantly derided by unions and the airline’s old guard, and subsequently cheered by patrons of the Chairman’s Lounge. Many a chief executive has since said it was a watershed moment in the national debate over productivity and the relationship between management, staff and the unions. It was a gamble that ultimately went Joyce’s way. And now the Qantas chief has made another very public gamble, taking on none other than his predecessor and former mentor in the process: Geoff Dixon.”

Sticking with company news for a moment, The Australian Financial Review’s Chanticleer columnist, Tony Boyd, says ANZ Banking Group global wealth and private banking boss Joyce Phillips is still coming to grips with the complexity of the unit eight months into the job. It’s symptomatic of this weakness in the ANZ armour, which has been underweight wealth manager for yonks.

Fairfax’s Michael West digs into the fine print of BCD Resources, the operator of the Beaconsfield mine in Tasmania, to discover that it has suddenly and inexplicably stopped dumping toxic waste in the historic mine. Only a few months ago the same company described it as "world’s best practice”. West has a great nose for these stories.

In economics, Fairfax’s Michael Pascoe says it’s clear the Australian dollar is going to remain elevated for the foreseeable future and industry leaders agitating for more action are wasting their time. Adapt or else.

The Australian’s economics editor, David Uren, continues an analysis of the contrast between the apparent comparable strength of the Australian economy against the rest of the world with the reality that our interest rates are approaching crisis levels.

The Australian’s Glenda Korporaal praises calls from former prime minister Paul Keating to raise the superannuation contribution rate to 15 per cent at some point in the future to take into account the larger than expected lifespans that people will lead, racking up significant healthcare costs in the process.

The Australian’s Richard Gluyas touches base with both sides of the Atlantic Ocean for a summation of the debt crises that are affecting the continents of Europe and North America (excluding Canada).

The Australian’s Robin Bromby reports on the shifting gold reserve targets that the Chinese government has.

And finally, Fairfax’s Malcolm Maiden joins the recently rekindled debate – at least in the business pages, the debate itself never really stops and for good reason – about women in senior management positions with an important point. The fact that couples are delaying childbirth means that women are having their careers interrupted at a more telling point.

If generation X and Y were to have children earlier, they’d be in school by the time the parents reach mid 30s, making it easier (but not easy) to manage family and careers. But the chances are that if you pitch that idea to people in those two generations, they’d say they’ll enjoy their 20s.

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