Qantas lawyers more concerned about 20-hour Project Sunrise flights than ground crew outsourcing

Qantas had legal advice that outsourcing ground crew was more lawful than 20-hour Project Sunrise flights, a Federal Court hearing has been told.

A meeting between Qantas industrial relations executives and lawyers was told the case for a proposed outsourcing of ground handling operations was stronger than that for the airline’s much anticipated Project Sunrise flights.

The surprise admission was revealed in a Federal Court hearing before Justice Michael Lee to determine what penalty Qantas should face for outsourcing the jobs of 1820 workers, which was found to be partly motivated by an unlawful reason.

Presenting Qantas’ case for a “mid-range” penalty rather than the maximum fine being sought by the Transport Workers Union, barrister Justin Gleeson SC referred to notes from a June 2020 meeting held to discuss the legality of the outsourcing.

“To say it’s stronger than Sunrise — that appears to be some assessment as to whether the case for lawfulness is stronger than Project Sunrise,” Mr Gleeson said, reading from the notes.

Project Sunrise is the name Qantas has given to planned ultra-long-range flights between Sydney and New York or London, now expected to start in 2027.

Since the meeting in 2020, Qantas has reached agreement with pilots and cabin crew who will work on the flights of 20 hours or more.

Qantas is seeking a penalty in the range of $40m to $80m for its contravention of the Fair Work Act, with Mr Gleeson arguing one senior executive’s desire to avoid industrial action by TWU members was not factored into the decision-making process.

“The prohibited reason was not sufficiently perceived through the privileged communications, and therefore was not sufficiently identified to the decision maker and the management committee,” said Mr Gleeson.

“In terms of the quality of the wrongdoing, that’s where the process fell down.”

An Airbus A350-1000 flight test aircraft flies over the Sydney Opera House to mark the announcement by Qantas about non-stop "Project Sunrise" flights. Picture: James D. Morgan/Getty Images for Airbus/Qantas

He said Qantas had learnt its lesson and was confident it would not happen again.

“What should have happened, was the group management committee should have been told if this reason is becoming operative then (the outsourcing) is a no-go and the board should have been told,” Mr Gleeson said.

“If that had happen we would not be in the situation we’re in, but in terms of going forward we would submit ‘Your Honour can be comfortably satisfied Qantas has learned its lesson’.”

Barrister for the TWU Noel Hutley SC refuted Qantas’ argument, suggesting it raised more questions than provided answers.

“In our respectful submission, how did everybody miss it?” he said.

Justice Lee again raised concerns that Qantas had not put CEO Vanessa Hudson on the witness stand, as someone who could speak to the cultural change at the airline.

Instead chief people officer Catherine Walsh, who began at Qantas in early 2024, gave evidence on day one of the penalty hearing.

“Why shouldn’t I draw inferences that Qantas wants to do all they can to protect themselves from scrutiny?” said Justice Lee.

Mr Gleeson replied that Ms Hudson’s testimony would not have made their case any better.

“You have the unchallenged evidence of Ms Walsh that when she took on the role, it was explained to her pellucidly clearly by Ms Hudson that a change had been made at Qantas and the property dealing with employees was to be given central attention by Ms Walsh and on the group leadership team,” he said.

“That’s a fact that’s something has happened that’s in the CEO’s favour and in Qantas’ favour.”

Day 2: Qantas seeks a lighter penalty

Qantas is asking for leniency from the Federal Court in hearings to determine a penalty for its unlawful outsourcing of 1820 workers, claiming the decision was a “mistake” rather than deliberate.

The Transport Workers Union which brought the case against Qantas, wants Justice Michael Lee to impose the maximum penalty of $121m against the airline, highlighting its reluctance to accept the ruling and lack of remorse.

Barrister for the TWU Noel Hutley SC said even the witness used by Qantas, chief people officer Catherine Walsh, demonstrated the company’s culture remained unchanged.

Ms Walsh was only appointed to Qantas in early 2024, and Mr Hutley said putting her on the stand “had the look of choosing a person who could not be the subject of true investigation”.

“Ms Walsh had nothing to do with the events (of the outsourcing) and Your Honour will have noticed every time I cross-examined her about a particular event she said ‘well I wasn’t there, I can’t speak to that’,” said Mr Hutley.

Justice Lee agreed that Ms Walsh was not the best choice of witness for Qantas in the circumstances and noted he’d given the airline ample opportunity to call chief executive Vanessa Hudson, who was chief financial officer at the time of the outsourcing.

“One would have thought if you were truly contrite, put someone in the witness box who was there at the relevant time who said ‘I was part of the organisation when this decision was made, and I now change my tune’,” said Justice Lee.

“And I gave them every opportunity to call (CEO) Ms Hudson or somebody else in that situation and a deliberate forensic decision was made for her not to be called I would infer.”

Qantas CEO Vanessa Hudson was in a relevant position at the time of the outsourcing decision. Picture: Qantas/NewsWire

Mr Hutley also criticised Ms Walsh’s lack of familiarity with the case after she conceded she had read the court judgments but not affidavits submitted by the various parties.

“It’s our respectful submission that an organisation truly concerned about the culture that produced this catastrophe would want a thorough investigation into all aspects of that which had transpired to see how it should address those concerns,” he said.

Staff training was undertaken in response to the case but not until March this year, with a second session held on May 12, Mr Hutley told the court.

He suggested the training was a cynical exercise, given it took place 4.5 years since Justice Lee’s original judgment which found Qantas was partly motivated by a desire to avoid industrial action when it outsourced the ground handling workforce.

“At one level Qantas is saying ‘we want to get better’ but there is an absence in this organisation, as is reflected in their contrition, of coming to terms with how serious the events were,” Mr Hutley said.

Barrister for Qantas Justin Gleeson SC told the court the airline was seeking a “mid-range penalty” of no less than $40m and no more than $80m.

He said the court “can and should impose a significant deterrent penalty” but pointed out it was a first contravention, and no further contraventions had occurred since then.

His submission focused heavily on legal advice prepared in advance of the outsourcing decision which showed there was no attempt to conceal an “illicit reason”.

Although Qantas accepted former executive Paul Jones was motivated by a desire to avoid industrial action by the ground handling workers, Mr Gleeson said the sole decision maker Andrew David and other senior executives were not aware of that.

“So much of this process which we submit was a proper process, was directed to, can we actually make good that those three reasons (for the outsourcing) are sound commercial reasons, and they’re not in fact concealing some illicit reason,” said Mr Gleeson.

“Where it went wrong was that in this process of testing the reasons, the thing that really needed to be looked for, which was the risk of the fourth reason having intruded into that process was missed, it was not identified and that is a mistake, and that is what led to the contravention.”

Mr Gleeson will continue his submission on Wednesday, before Mr Hutley has the opportunity to respond.

It was expected the TWU would maintain its position that a “significant deterrent penalty was required” against an organisation Mr Hutley said had shown an “arrogant attitude to these events”.

“And it has up until literally the wheels finally fell off, and even then only after Your Honour has blown away its no compensation (case),” said Mr Hutley.

“It is an organisation in our respect that needs particular deterrence.”

Justice Lee responded that Qantas could not be treated differently from other large organisations “simply because it’s an iconic Australian brand”.

Day 1: Qantas remorse

Justice Lee on Monday questioned the sincerity of Qantas’ remorse for illegally outsourcing the jobs of more than 1800 ground-handling workers, pointing out that the airline had sought to pay zero compensation to those affected.

The long-running case brought by the Transport Workers Union is now in its final stages, almost four years after Justice Lee found Qantas was motivated by unlawful reasons when it outsourced its below-the-wing workforce.

In the first day of hearings, Ms Walsh stressed how “deeply sorry” she was.

Ms Walsh said that view was one she held when she began in the role, and continued as she came to understand the background of the matter.

“You understand the primary case put before me (by Qantas) at the compensation hearing, was that I should accept the ‘logical counterfactual’ and that would’ve meant that no compensation would’ve been payable to the workers?” Justice Lee asked.

“Yes,” Ms Walsh responded.

“Were you aware of that as of March 2024 – at the time when you were deeply, very sorry for the workers and the impact to employees – that was the primary case being advanced by Qantas in court?” Justice Lee continued.

“I can understand the view at the time was the need to put all matters before the court, and the court made the appropriate determination,” Ms Walsh said.

“Hopefully you can see from the size of the compensation payment ($120m) that in fact we are very sorry; we do wish for the workforce to be properly remediated.”

Baggage handlers loading a Qantas aircraft at Brisbane Airport after the airline outsourced the work to third-party companies. Picture: Dan Peled

The TWU’s representation of Qantas workers was dramatically reduced as a result of the outsourcing.

Mr Hutley said the unlawful outsourcing was the “largest ever contravention of the general protection provisions of the Fair Work Act, and the preceding legislation dating back to 1904”.

“The contravening conduct was engaged in solely for money, and in pursuit of Qantas’ economic self interest,” Mr Hutley said.

“Qantas prioritised its commercial interests over those of its loyal employees by we say clearly and demonstrably, breaching the norm prescribed by Section 341b of the Fair Work Act.”

Mr Hutley said the TWU submitted that Qantas attempted to “reverse engineer” the decision-making process by crafting reasons for the outsourcing that would survive scrutiny by the court.

“The processes deployed by Qantas made detection of its contravention all the more difficult,” he said.

The court heard on Monday that weeks before the outsourcing was first announced in August 2020, Qantas held meetings with lawyers, drafted affidavits and discussed who should be named as the sole decision maker.

“A strategy was being put in place … to effectively, cynically create a trail which disguises what in truth is happening,” Mr Hutley said.

Justice Lee asked whether the attempted cover-up by Qantas warranted the imposition of the maximum penalty.

He made the point that it was a standard discovery order he issued which turned up a single handwritten document that “gave a window into what was happening”.

It was revealed that the original document was never found – only a scan that was part of an email.

“The message must be sent to the broader corporate community that you can’t play the court for a fool and try to fashion your evidence in a careful way, in order to try to dissemble what went on,” said Justice Lee.

Originally published as Qantas lawyers more concerned about 20-hour Project Sunrise flights than ground crew outsourcing