Michael West writes

Scott Morrison and Josh Frydenberg, no doubt with the counsel of Qantas chief executive Alan Joyce, repelled calls for a Qantas “bail-out” in early April 2020.

Yet, just as the pandemic gripped, they promptly began bailing it out. Virgin too, an airline 90% owned by foreign airlines and tax refugee Sir Richard Branson, a resident not only of the notorious tax haven, British Virgin Islands, but with his very own British Virgin island.

Although some $5bn in public money has been lavished on the aviation sector, of which Qantas accounts for 70% in domestic terms, they never once called it a bail-out. As Qantas shares plummeted to $2.36 in  March 2020 – way off their highs of $7.34 three months earlier – Frydenberg opted for what the Coalition called their “market-led solution”.

The biggest beneficiaries of this $5bn “market-led solution” were Qantas and Virgin shareholders. A good deal of it was via JobKeeper (for Qantas – as Virgin went into administration), a program which gave money straight to corporations, not to the employees themselves.

Since then, Qantas itself has wolfed down more than $2bn in public money and shed 9400 staff. Some 2000 were axed unlawfully, according to the recent Federal Court decision. And now its chief executive Alan Joyce is back making acquisitions again, using the public rescue to buy other companies and a bunch of new planes. And his pay, along with other executives, is once again on the rise.

Joyce topped Australia’s pay leagues in 2018 with a thumping $24m and has been one of Australia’s best paid executives over the years, if not the best, taking this mantle from the infamous Macquarie bankers, also ironically the winners from another government bail-out during the Global Financial Crisis.

But what has the public got in return for its Morrison government largesse? Look no further than the MacBank logo for this answer … a slick donut.

Well actually, we did get airport queues and chaos, a deluge of customer complaints, rising acrimony, falling service standards and another company simply too big to fail.

In effect, Joyce has has been rewarded for breaking the law (he is appealing the Federal Court’s decision on unlawfully sacking 2000 Qantas staff, using Qantas subsidised shareholders’ funds, to the High Court). It has raked in more subsidies than any other company, and the government has sponsored Joyce’s restructure of the airline and its new fleet, enhancing the value of Joyce’s own stock in the process.

As the pandemic hit and finance press dutifully toed the Qantas PR line, we were arguing that the government should buy the business, not the company, wave goodbye to the shareholders, then refloat Qantas and Virgin for a profit when the pandemic was over and things returned to normal.

Nationalisation in other words. That is, if Australia’s professed “superior economic managers” were to throw billions at these corporations in bail-out packages, surely they ought to get something in return for the people they were meant to represent, the Australian public. Alas nationalisation is a dirty word at the big end of town. There’s no money in it.

Did Morrison and co demand job guarantees from Qantas, service guarantees, tax reform to stave off another decade of Qantas paying little tax? None of that. They let their mollycoddled “free marketeers” skin them alive for public funding.

Just $5bn in public money, a bail-out dressed up as “not a bail-out”.
Typical of governments these days there was not even a skerrick of reform,
not even the faintest debate about how these might be made better for the future.

Apart from pushing its faux neo-liberal creed of free markets, Qantas has always been a sacred cow. Our politicians and business leaders recline in comfort in their Qantas lounges, with Rupert Murdoch’s Sky News on their TV screens, enjoying their frequent fliers.

Yet the Spirit of Australia has vanished, replaced by an avaricious corporate monster preying on taxpayers at every turn. Old codgers such as this writer will recall better times. Once the staff were proud to work there.

There were smiles from the check-in crew. Travellers would be met with a welcome, albeit slightly jarring Aussie accent when getting on a Qantas flight after time abroad. In 2010, even as the customer service was already in decline, there were 37,500 people working at Qantas. Now there are 22,000.

And the result of this non-bail-out bail-out, this “market-led solution”, is that Qantas now enjoys an even larger slice of the domestic aviation market, the “golden triangle” or Melbourne to Sydney return route which is one of the world’s most profitable.

So the “free market” is more of a monopoly than ever, or at least since the collapse of Ansett the decade prior.

Joyce totally outfoxed the Morrison government, even emerging from one negotiation with a subsidy of $1000 a flight, often more than the cost of the ticket itself, and on top of relief on landing fees, fuel excise and security charges. The $715 million regional assistance package which Joyce negotiated was even backdated by six weeks.

In Joyce’s defence, and as we have noted here many times, Qantas is one of the very toughest businesses to run. The size, logistics and myriad stakeholders make it the trickiest of corporate juggling acts.

And he has done it well, for shareholders. Oh that the government might display even a fraction of Joyce’s competence on behalf of taxpayers who they are supposed to represent. The pandemic too was a mighty juggle, a politician’s nightmare.

Even with the rush, the uncertainty and the tumult of the pandemic however, there has been not even the slightest evaluation of how these things might be handled in the next disaster. They could have ensured some quid pro quo or debated some serious issues for reform such as addressing the endless banking of tax losses.

But no, they have preferred to claim that markets know best while spraying those very markets with other peoples’ money.

The sharemarket value of Qantas was $3.3bn when the Morrison government slotted them $2bn in corporate welfare.

It’s now almost $10bn. The way executives and boards tend to award remuneration is to strike options or share deals when share prices are low so the profits are maximised when the share prices rise again. We have not checked the complex Qantas remuneration structures but Joyce himself has around 670,000 shares awarded to him. As the stock has recovered, he should be heading towards double-digit pay in the millions again.

He picked up $24m in pay in 2019. It sank sharply and rose again last year by 19% to $2m. If not for the war in Ukraine which sent oil prices soaring, Qantas shares would be well above $10 now. And had, theoretically, the government bought and refloated Virgin and Qantas it might have looked for $20 billion in IPO proceeds for the public chit.

With customer dissatisfaction also soaring – particularly in the wake of recent airport chaos when Joyce slipped up and blamed travellers for not being “match fit” – this is a debate, corporate welfare that is, or Qantas’s self-interested “socialism”, will soon reach record altitudes.

You might not notice it in the mainstream media much though as Qantas, and we can report this from personal experience, is one of the country’s biggest advertisers and has a track record of being heavy-handed on the corporate media PR front.

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences.

Writing in the Sydney Morning Herald last October, Steve Purvinas, Federal Secretary of the Australian Licensed Aircraft Engineers Association pointed out the double standards being espoused by Qantas management:

“After Qantas announced a $2.8 billion loss in 2014, staff were all called on to freeze their wage levels for 18 months, a call that my union was first to heed in order to help the struggling airline. Assuming the alternative possibility of CPI-based wage increases, employees now forgo $60 million each year as a result of the ongoing wage freeze. At the same time executive and senior management remuneration packages have increased by – you guessed it – $60 million each year. Not one cent forgone by employees to help the airline has gone into reinvestment or new aircraft”.

Indeed, while executive salaries rose at a clip, the average age of the Qantas fleet, which is older than peer airlines, went from 8.3 years in 2012 to 12.8 years since last year. Alan Joyce has taken out around $100 million in executive pay since he took the reins at the airline in 2009.

It is little wonder the reputation of big business and government has taken a battering; the former for greed and the latter for poor stewardship. It is a crisis in leadership which undermines the credibility of government and therefore the ability of politicians to legislate effectively, to reform. It would be a mistake to let this crisis pass without real reform. It is unlikely the public will swallow the line for much longer that “free markets” should prevail in the good times only to be quickly dismissed in favour of corporate welfare when things go awry.

Alan Joyce picked up a cool $24 million last year. With three months left to run this financial year, the chief executive of Qantas may take a pay cut of $500,000 or $600,000 on his base salary of $2.1 million.

Alan Joyce was hinting at government help for the airline the last time things got tricky when Qantas declared a $2.4 billion loss in 2014. Things are worse now. Debt stands at $4.6 billion and $5.8 billion in liabilities from “revenue booked in advance” is sitting on the airline’s balance sheet. Now that flights are being cancelled en masse it is unclear what proportion of customers will be reimbursed but – with a dividend of $201 million slated to be paid on April 13, things are tight.

Qantas though is lucky. Like Australia’s banks, it is “Too Big To Fail”. If things get worse, as financial markets are indicating, the Government might let Virgin Australia fend for itself, but never the Spirit of Australia, nor the banks. Already, the banks are underpinned by taxpayers. We own their risk. Indeed the Reserve Bank has been buying their assets (debts) from them in rising quantities over the past few days. By the time this crisis has passed, the public will take a different view of corporate welfare.

Surely neo-liberalism is on its last legs.