By Amelia McGuire and David Crowe
Qantas’ outgoing boss, Alan Joyce, has pocketed more than $10 million in shares for meeting the airline’s COVID-19 recovery goals, even as the consumer watchdog seeks to punish Qantas for allegedly selling tickets to flights that were already cancelled.
The airline on Friday disclosed to the sharemarket that Joyce had been issued 1.7 million Qantas shares, worth more than $10 million, for hitting key financial targets. The reward was part of Joyce’s bonuses from 2020, 2021 and 2022, and a separate incentive scheme the airline unveiled during the pandemic.
The payment comes as the head of the Australian Competition and Consumer Commission (ACCC), Gina Cass-Gottlieb, said Qantas should be fined hundreds of millions of dollars if found to have breached consumer laws, and influential advisory groups ramped up pressure on Qantas’ board over the payment of bonuses.
The ACCC this week alleged Qantas had falsely advertised sales on 8000 flights weeks after they’d been cancelled, and Cass-Gottlieb on Friday signalled the regulator wanted to extract a hefty penalty.
“We think the penalties in consumer law cases have not been high enough,” Cass-Gottlieb said in an interview with this masthead. “If a corporate giant is told to pay $100 million, it is seen as the cost of doing business. We would hope hundreds of millions of dollars would be enough to act as a deterrent to not only Qantas but others if these allegations are satisfied in court.”
The ACCC rarely weighs in on the size of a potential penalty before the matter has been decided by the Federal Court, but Cass-Gottlieb said it was important that companies were put on notice.
Qantas also issued thousands of shares to incoming chief Vanessa Hudson and other senior executives on Friday, after the airline made a record $2.47 billion in profit last financial year following three years of COVID-19 losses.
It has been a tumultuous week for Qantas, with Joyce on Monday facing a fierce grilling from a Senate inquiry, before the ACCC launched its case against the airline on Thursday.
The group’s relationship with the government has come under scrutiny since Transport Minister Catherine King rejected Qatar Airways’ request to double its flights to Australia last month. The extra flights were opposed by Qantas but supported by most of the tourism and aviation industry.
Asked if the government should allow Qatar Airways into the routes, Labor Party president and former federal treasurer Wayne Swan called for a review of the decision.
ACCC chair Gina Cass-Gottlieb says it received 1300 complaints about Qantas cancellations.Credit: Alex Ellinghausen
“These things are negotiated government-to-government from time to time, and I think an appropriate review of where things are, given all these revelations, would be good,” Swan said.
With the airline’s share price falling sharply in the last month, despite reporting a bumper profit last week, key investor advisory groups on Friday signalled they would scrutinise the board’s decision on executive bonuses in light of the ACCC case.
Joyce, who is leaving the role in November, is also eligible for a short-term bonus of up to $4.3 million for this financial year, depending on the approval of the group’s board.
This figure is in addition to his long-term bonus, about $18 million worth of shares that he has already been granted.
Ownership Matters’ Dean Paatsch, who advises big investors on governance issues including executive pay, said: “Investors will be keenly watching the board’s decision in relation to Alan Joyce’s short-term bonus in light of the ACCC’s issuance of proceedings and their pursuance of at least $250 million in potential penalties.”
The head of Australia’s Council of Superannuation Investors (ACSI), Louise Davidson, who represents big super investors, also said her organisation was watching the Qantas board closely.
“ACSI will be watching the Qantas board very closely to see how the ACCC proceedings against the airline and the significant damage to reputation the airline has sustained over the last 12 months impact the awarding of bonuses,” Davidson said.
By the time he steps down in November, Joyce will have been paid more than $24 million.
If Qantas is fined hundreds of millions of dollars for the alleged breaches, it would be one of the biggest penalties awarded under Australian Consumer Law.
Cass-Gottlieb repeated her call for the Federal Court to impose a penalty of “more than double” a $125 million penalty paid by Volkswagen, saying it would act as a deterrent to it and other companies that have allegedly failed their customers. She said the watchdog was on a path to substantially increase the penalties that corporations paid.
According to the ACCC, Qantas kept selling tickets on its website for an average of more than two weeks, and up to 47 days in some cases, after those flights were cancelled. The flights were scheduled to depart between May and July 2022. The consumer watchdog also alleges that ticket holders on about 10,000 flights were not told their flight had been cancelled for between 18 and 48 days.
Golding’s view
Qantas said it would examine the ACCC allegations and respond in full to them in court.
The ACCC chair acknowledged that while there was no clear benefit for Qantas over the two-month period the alleged conduct took place, there was a clear loss to consumers. The Australian Consumer Law’s section regarding misleading and deceptive conduct is not about intent, but negligence.
“Consumers are likely to have paid more to get another flight with less notice in order to fly to the same place they needed to. In other cases, they were not able to fly where they needed to but have paid accommodation. Aside from the stress, time loss and emotional disruption, they have less time to change their travel arrangement. For us, that impact on consumers is enough and is why this matters,” Cass-Gottlieb said.
Qantas shares dropped 1.5 per cent to $5.82 on Friday and have fallen about 10 per cent over the past month.
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