The atmosphere at Qantas’ annual general meeting on Friday was noticeably different from that of last year, but experts caution that the airline’s brand still faces significant challenges.
As shareholders gathered in Hobart, their spirits were evidently lifted, with the company’s stock price soaring over 60% to just above $8. This came on the heels of a tumultuous year marked by pandemic recoveries and record multibillion-dollar profits. A year ago, however, shareholders expressed their anger through one of the largest protest votes in Australia’s history against executive compensation, triggered by a series of scandals that led to the abrupt departure of long-term CEO Alan Joyce.
What has changed in the past year to elicit such a positive response from investors? Tony Webber, CEO of Airline Intelligence & Research and former chief economist at Qantas, suggests that while financial metrics have improved, the company still faces the long and arduous task of repairing its reputation. “Sure, they might be seeing lower dividends, but the rise in share price is phenomenal,” he noted. “Their financials are clearly better, but they’ve also managed to alienate many customers along the way.”
Despite the positive sentiment among shareholders regarding current corporate performance—aside from some dissatisfaction over dividends—the lingering memories of last year’s spirited AGM were unmistakable. Investors brought up significant concerns about the financial implications of a recent settlement with the consumer regulator, which involves a $100 million penalty and $20 million in compensation for selling tickets on canceled flights. Additionally, discussions surfaced about the costly repercussions of illegally terminating nearly 1,700 baggage handlers back in 2020, with total compensation costs expected to exceed $100 million.
Amid this atmosphere, one shareholder, Chris Maxworthy, humorously pointed out that he felt “the ghost of Alan Joyce” in the room, referencing last year’s AGM where former chair Richard Goyder had curtailed his ability to speak.
John Mullen, the new chair of Qantas, responded thoughtfully to shareholder inquiries, often addressing concerns on behalf of the board despite some investors pushing for direct answers from specific directors. Mullen stood firm against suggestions that Joyce’s final pay package— which had already been reduced by $9.3 million following a governance review— should face even further cuts.
In his opening remarks, Mullen acknowledged the challenges of the previous year, stating, “Last year was undeniably difficult for Qantas.” He assured stakeholders of the airline’s commitment to learn from past mistakes and to regain the trust of customers, partners, and employees.
While Mullen admitted to the controversial decision to outsource ground handling, Webber indicated that financially, Qantas may be seeing overall savings from these changes. Rachel Waterhouse, CEO of the Australian Shareholders’ Association, expressed cautious optimism about recent governance reforms but emphasized that tangible outcomes will take time.
The governance review released in August revealed the board’s excessive deference to Joyce, highlighting a lack of focus on non-financial issues and the importance of employees and customers. However, confidence in the brand remains shaky. According to polling by Roy Morgan, Qantas has dropped in trust rankings and is now the second-most distrusted brand in Australia, trailing only Meta, formerly known as Facebook.
Although internal company research reflects slight improvements in reputation, the legacy of Joyce’s decisions, particularly concerning fleet management, means that many customers are still flying on older planes that are more prone to disruptions. Webber cautioned that while new aircraft deliveries are expected to increase, Qantas cannot afford to become complacent about its financial recovery.
Waterhouse echoed this sentiment, urging continued vigilance. “Culture and change takes time. There are significant costs and challenges that lie ahead. While it’s moving in the right direction, there’s no need to get overly optimistic just yet.”
