This was published 6 months ago
Opinion
How Qantas’ new chief executive managed to thwart the critics
Elizabeth Knight
Business columnistThere is no Australian chief executive under more scrutiny than the newly installed Qantas boss Vanessa Hudson. Her maiden profit announcement was a delicate balancing act between pleasing shareholders and appeasing customers. She pretty much nailed it.
If one were to write a report card, Hudson would score well – but there is room for improvement.
Vanessa Hudson delivers her maiden result.Credit: Louise Kennerley
Her performance was without the mea culpas we have become so accustomed to from Qantas – and Hudson has clearly grown in confidence. (She told me she was having a great time at the top of the organisation and professed to loving a dive in the deep end.)
Sure, her presentation could have done without the clunky props, such as the two pilots plonked onto the podium to espouse the virtues of its new aircraft. That felt both contrived and uncomfortable – and a bit Alan Joyce-ish.
Qantas’ earnings were down 13 per cent in the half year to December, which was a creditable result given it was pitched against the outsized and unsustainable earnings the carrier produced the same time last year.
To have bettered or even matched last year’s result would have been a bad look – particularly as the first half in 2023 was achieved on the back of egregiously high fares and poor service.
We now live in unusual corporate times, where over-earning can be considered a sin.
For example, the result was robust enough to elicit condemnation from the Transport Workers’ Union, which claimed Qantas was on its way to an obscene full-year result.
Hudson knows that her appointment was an opportunity to reset the balance between keeping customers and shareholders happy, and to address the brand damage that had been sustained in the final years of the Alan Joyce era.
Tackling both these price/service customer pain points together with a few more, such as the difficulty loyalty customers have had trying to use decently priced frequent flyer points, seems to be heading in the right direction. Statistics from the government department that monitors aviation show that on-time performance is improving, alongside a fall in the number of cancelled flights.
However, if you ignore some of the “specials” that have been offered, particularly by Jetstar, airfares remain too high, particularly on international flights.
And while international capacity is coming back slowly, Qantas’ international capacity (excluding Jetstar) is expected to reach only 90 per cent of pre-COVID levels by the first quarter of the 2025 financial year.
Hudson spent $90 million on trying to fix the pain points – including adding more customer centre staff and introducing a new app meant to let customers better self-service, plus the release of more reward seats and better food. And she has earmarked an even larger investment in customers in the second half of the financial year.
The first half of the 2023 financial year was marked by what has become known as “revenge travel” – the post-COVID era when there was a spike in demand from people that had been forcibly bunkered at home.
Since that period, airfares have eased – and this has been one of the major reasons for the lower profit. A fall in freight also took the gloss off the international business.
The heroes of this result were Jetstar and Qantas’ loyalty businesses – both of which managed to improve on their performance in the previous corresponding half. Jetstar grew its underlying profit by 84 per cent and loyalty raised profit by 23 per cent. Meanwhile, Qantas’ domestic earnings were slightly below analyst expectations – a result that was a mixed bag.
Hudson manages to traverse the fine line between over-earning and under-earning.
Her next challenge is to improve margins and profit in an era where our obsessive love affair with air travel is dwindling.
Achieving that, she would command a near-perfect score.
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