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Will Australians ever love Qantas again? · The Front

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  Speaker 1: the news from The Australian. From the Australian, Here's what's
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  Speaker 1: on the Front. I'm Claire Harvey. It's Friday, August thirty.
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  Speaker 1: industry award, with hearings said to kick off in September.
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  Speaker 1: Those stories alive right now at the Australian dot com.
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  Speaker 1: Dora You Quantus made a squeak over two billion dollars
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  Speaker 1: in profit and is spending two hundred and thirty million
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  Speaker 1: dollars finding our lost bags and improving the food. So
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  Speaker 1: will it be enough to reignite our love affair with
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  Speaker 1: the flying kangaroo. That's today's story.
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  Speaker 2: Lovely city and never lost a matter.
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  Speaker 1: Eric, like me, you would have grown up in the
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  Speaker 1: era of beautiful Quantus ads. Quantas had acchoir. They really
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  Speaker 1: tugged at our heartstrings, didn't they and established this as
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  Speaker 1: a brand that Australians really loved.
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  Speaker 2: That's right. And now fast forward today where we're upset
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  Speaker 2: about our planes been delayed or our bags being lost,
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  Speaker 2: and that sense of uplift has vanished with the winds.
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  Speaker 2: So this is all the job that new chief executive
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  Speaker 2: Vanessa Hudson, who took over from Alan Joyce in a
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  Speaker 2: fair bit of turmoil at the end of last year.
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  Speaker 1: Eric Johnston is an associate editor of The Australian and
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  Speaker 1: our Business Expert.
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  Speaker 2: It's her job to try and bring that bling back
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  Speaker 2: to Quantas, to try and bring that feeling back to Quantas,
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  Speaker 2: and they've already started doing that in some ways. And
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  Speaker 2: you would have seen some of the ads during the
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  Speaker 2: Olympics that played that that's been a while of money
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  Speaker 2: about the emotions, trying to bring some of the emotion back.
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  Speaker 1: Excuse me, everybody, but I just have your attentions please.
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  Speaker 2: This is Matthew Send off for the Powis Olympics. We're
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  Speaker 2: all behind you. There's a good luck to you. But
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  Speaker 2: it goes deeper than that and quantas. On Thursday, they
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  Speaker 2: released their full year results. Now this is important because
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  Speaker 2: it was the first set of results for Vanessa Hudson.
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  Speaker 2: She was the former CFO, the chief financial officer and
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  Speaker 2: promoted to the chief executive officer. Her task is to
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  Speaker 2: not only win back customers, but also to win over
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  Speaker 2: employees and also try and keep shareholders on site. Now
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  Speaker 2: that's all those three parties pulling in different directions. That's
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  Speaker 2: going to be a tough ask. But there was one
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  Speaker 2: number that stood out of the results apart, and I'll
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  Speaker 2: go into some of the other numbers in a bit,
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  Speaker 2: there was one number that just stood out to me.
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  Speaker 2: Thirty two percent reduction in mishandled bag. So it's this
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  Speaker 2: low hanging fruit to Vanessa Hudson has got to start
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  Speaker 2: picking to start winning over customers again. Yeah.
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  Speaker 1: In fact, COUNTUS revealed it has spent more than two
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  Speaker 1: hundred and thirty million dollars improving what they call customer
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  Speaker 1: pain points. It's really evident that Vanessa Hudson grasped from
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  Speaker 1: the beginning that this was her main job, isn't it.
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  Speaker 2: Yeah, Alan Joways ran the airline for shareholders. He was
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  Speaker 2: the investor's friend. He was able to really hack into costs,
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  Speaker 2: take billions of dollars out of the cost space. He
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  Speaker 2: ran it fairly tight in terms of investment, didn't invest
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  Speaker 2: in new planes, ran the old planes as hard as
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  Speaker 2: I could within a margin of safety of course, obviously.
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  Speaker 2: So he was winning over investors delivering these huge profits,
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  Speaker 2: but in doing so really got customers and also employees offside.
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  Speaker 2: So Vanessa Hudson gets some bigger waiting for her bonus
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  Speaker 2: on customer satisfaction and things like reputational issues and so on.
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  Speaker 2: So that means that she's really motivated now to make
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  Speaker 2: sure that she's winning over customers.
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  Speaker 1: Quantus has started closely measuring customer satisfaction, and they're claiming
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  Speaker 1: people like them more, a twenty two percent lift in
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  Speaker 1: their net promoter score and twelve points up on reputation.
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  Speaker 1: Thursday's results also showed staff attrition had fallen from almost
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  Speaker 1: nine percent to six percent, so people are quitting less.
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  Speaker 1: Now let's talk about the numbers, Eric, and I'm hoping
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  Speaker 1: you can explain them for me. Quantus delivered a two
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  Speaker 1: point zero eight billion dollar underlying profit for the year,
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  Speaker 1: and that's down a little bit from the previous year's
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  Speaker 1: profit of two point four to seven billion. But there's
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  Speaker 1: what seems to me to be an interesting contrast. Underlying
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  Speaker 1: earnings were nearly sixteen percent, but revenue was up ten percent.
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  Speaker 1: Can you unpack all that for me and explain what
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  Speaker 1: it all means.
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  Speaker 2: So, what we're seeing here that although more money is
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  Speaker 2: coming in the door, less of it is sticking around.
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  Speaker 2: And the reason is that all these initiatives that Vanessa
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  Speaker 2: HUDs says is doing is more costly. She's got to
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  Speaker 2: spend a lot more money to win over customers, to
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  Speaker 2: put wine back into to the service, or the sweet
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  Speaker 2: biscuit ram and the dry biscuit. That all that comes
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  Speaker 2: at a cost. It's a really big costly thing when
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  Speaker 2: you when it accumulates over a huge network. There's another thing,
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  Speaker 2: and she's doing a lot to win over her own workers.
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  Speaker 1: Quantus offers bonuses for staff to stay and they're committed
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  Speaker 1: to sixty million dollars to enact the federal government's same job,
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  Speaker 1: same pay reforms. That means a contract cabin crew member
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  Speaker 1: will now be paid the same as a Quantus staffer.
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  Speaker 1: Quantus dealt with its negotiations with the union quickly, something
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  Speaker 1: Eric says was a signal to the unions that Vanessa
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  Speaker 1: huh And is choosing her battles and something else is
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  Speaker 1: making us all feel a little kinder. Prices are coming down,
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  Speaker 1: thanks in part to the arrival of airlines like Singapore
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  Speaker 1: Airlines and Emirates all flying out of Australia into international destinations.
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  Speaker 2: This comes at a time when there's more capacity coming
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  Speaker 2: to the Australian aviation market too. So international carriers, Singapore Airlines,
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  Speaker 2: your Emirates, they're all sort of trying to jockey to
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  Speaker 2: fly bigger planes here and they're there child jocking for
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  Speaker 2: more to what capacity? Do have to try and get
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  Speaker 2: more entry points too?
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  Speaker 1: Or someone to Australia In the UK and US right now,
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  Speaker 1: a controversy is raging about how airlines, particularly budget carriers,
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  Speaker 1: treat their passengers. In particular, should parents be able to
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  Speaker 1: sit next to their young children? There are the woman
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  Speaker 1: who refused to give up her airplane seat for a
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  Speaker 1: mom who was in distress. In Australia, We'd say, of course,
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  Speaker 1: the answer is but on budget carriers, which require passengers
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  Speaker 1: to pay extra for particular seats. Some families are faced
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  Speaker 1: with the fear of being separated from little kids on
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  Speaker 1: a flight.
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  Speaker 2: It's such a tough industry, such a tough industry to
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  Speaker 2: work in, and there's one There was one famous aviation
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  Speaker 2: CEO who once quipped, don't forget the olives.
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  Speaker 1: The point of that is you can land all the
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  Speaker 1: planes safely but still enrage the customers if you don't
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  Speaker 1: get everything right.
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  Speaker 2: It's really capital intensive. You've spend so much money to
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  Speaker 2: get these things moving around. We as traveling public, demand
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  Speaker 2: a more personalized service. We do that with we expected
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  Speaker 2: when we order things on Amazon, we expected when we
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  Speaker 2: go to the supermarket. Aviation has tried to step up
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  Speaker 2: to the market that and many times it has failed
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  Speaker 2: to do that. That's the challenge that it's got to
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  Speaker 2: continue being a mass tran an option but offering a
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  Speaker 2: personalized service.
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  Speaker 1: Coming up? Can Vanessa Hudson rescue this battered brand. Subscribers
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  Speaker 1: to The Australian a first to hear breaking news from
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  Speaker 1: the business world, Join us at the Australian dot com
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  Speaker 1: dot au. It's a lot cheaper than a packet of
• 9:20
  Speaker 1: ice cold peanuts and a glass of warm Chardonnay on
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  Speaker 1: a plane. We'll be back after this break. I've often
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  Speaker 1: wondered if in retrospect we would consider Alan Joyce as
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  Speaker 1: a kind of business genius who kept Quantus flying after
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  Speaker 1: the pandemic, who ripped a huge amount of cost out
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  Speaker 1: of the business, who was pretty ruthless in some of
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  Speaker 1: the decisions that he made, or if we would think, actually,
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  Speaker 1: he destroyed this airline's brand. How do you think history
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  Speaker 1: judging Joyce?
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  Speaker 2: He was there far too long as a CEO. Fifteen years.
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  Speaker 2: It's too long for a publicly listed company. In recent weeks,
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  Speaker 2: we've seen a board review come out and would take
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  Speaker 2: look and so we're crawing back nine million dollars of
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  Speaker 2: Alan Joyce's bonus from his last year. Now, he did
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  Speaker 2: get a fair bit amount in previous years, so I
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  Speaker 2: don't think he will be crying poor. He did transform
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  Speaker 2: expectations around Quantus, because the Quantus ads to circle back
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  Speaker 2: where we started. That was of an era of less competition.
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  Speaker 2: There weren't discount carriers in the world. That was, ticket
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  Speaker 2: prices were high, less flexibility was in the system, so
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  Speaker 2: the margins were much higher. So they could afford that.
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  Speaker 2: We couldn't afford to fly like that, but they were
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  Speaker 2: certainly as a different era. Alan Joyce came. He actually
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  Speaker 2: worked at Ryanair and came to Quantas. He's made genius.
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  Speaker 2: When he started at Quantus was his mathematician. He's a
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  Speaker 2: trained as actually a rocket scientist. His mate genius was
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  Speaker 2: figuring out more efficient waves and routes to fly the
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  Speaker 2: aeroplanes that on the margins saved on fuel on every flight.
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  Speaker 2: But you add that up through the network again, suddenly
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  Speaker 2: marginal increases is quite significant in terms of savings. He
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  Speaker 2: built up jet Star, started jet Star under the former
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  Speaker 2: CEO Jeff Dixon. Now in today's results fast forward to today,
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  Speaker 2: Suddenly Jetstar was a really strong performer. It really appeals
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  Speaker 2: to this type of environment that Australia is in at
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  Speaker 2: the moment. Everyone is saving their pennies at cost of
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  Speaker 2: living is such a big issue. But he managed to
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  Speaker 2: do what many many major airlines, main brand airlines that
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  Speaker 2: haven't been able to do. And he's able to have
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  Speaker 2: this low cost airlines sit within the same structure as
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  Speaker 2: a full freight mainline airline. So presh Shareways has tried it.
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  Speaker 2: They didn't work for them. Luftans has tried it didn't
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  Speaker 2: work for them even and I've tried it. But perhaps
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  Speaker 2: history over time will look at it and say he
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  Speaker 2: stayed too long and it was the airline that needed replenishment.
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  Speaker 1: Vanessa Hudson came in and one of her first acts
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  Speaker 1: was to apologize to people and to the flying public
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  Speaker 1: and to the Quantus staff and say, I'm going to
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  Speaker 1: be different. Do you think she's capable of rebuilding Quants
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  Speaker 1: to back where it was as a really beloved Australian brand.
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  Speaker 2: It can be done. So all of us that have
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  Speaker 2: been overseas and it's the middle of the night, we
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  Speaker 2: don't know where we are, and then suddenly we're walking
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  Speaker 2: through an airport and we see a Quantus tail somewhere.
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  Speaker 2: You know, the old heartstrings of cool. She doesn't have
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  Speaker 2: to win over people. She just has to make sure
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  Speaker 2: that Conus doesn't push people away. Now she's fighting in
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  Speaker 2: a really tough market. So you've got the Middle Eastern
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  Speaker 2: airlines em Roots and the Antyads and they run on
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  Speaker 2: a different cost structure too, so they're really competitive and
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  Speaker 2: they're offering full service and new araplanes. Vanessa Hudson and
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  Speaker 2: these are decisions made many years ago, but she's now
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  Speaker 2: getting the beneficiary she's benefiting from getting all these brand
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  Speaker 2: new eraplanes. Now these were signed off by Allen Joyce
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  Speaker 2: in the midst of COVID. It was a long term
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  Speaker 2: decision that's now starting to come to fruition. You walk
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  Speaker 2: on a brand new plane, you think, oh, this is okay,
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  Speaker 2: this is good as opposed to a fifteen or twenty
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  Speaker 2: year old old war horse. But that also these new
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  Speaker 2: planes make a big difference too. They're much more efficient
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  Speaker 2: to run. They don't need to don't need to run
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  Speaker 2: as many staff around them, you don't need to. The
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  Speaker 2: engineering costs come right down as well. So Vanessa Hudson's
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  Speaker 2: trick is to not push people away, to win them
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  Speaker 2: over and don't lose their bags.
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  Speaker 1: Eric Johnston is an associate editor with The Australian. Thanks
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  Speaker 1: for joining us on the front this week. Our team
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  Speaker 1: is Kristin Amiot, Jasper lik LEAs Temmaglue, Josh Burton, Tiffany
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  Speaker 1: de mac and may Claire Harvey.