Unlawfully outsourcing 1820 jobs has saved Qantas much more than it cost the airline
Qantas’ unlawful outsourcing has cost the airline an estimated $240m – leaving the airline about $260m ahead, based on forecast savings from the move.
The $90m penalty imposed on Qantas for its illegal outsourcing of ground crews is more than covered by savings already made from the decision, eclipsing the cost of the long-running court ordeal.
Federal Court judge Michael Lee imposed the record penalty on Qantas in a lengthy judgment delivered on Monday, and ordered $50m of the fine be paid to the Transport Workers Union.
A further hearing to determine how the remaining $40m is distributed has been scheduled for August 27.
The fine plus the $120m compensation fund Qantas provided for the 1820 affected workers, along with an estimated $30m legal bill, adds up to a total cost to Qantas of about $240m.
Qantas’ own calculations, however, suggest the airline has already saved close to $500m by outsourcing the below-the-wing workforce at 10 airports to companies including Swissport and Menzies.
At the time of the outsourcing, in late 2020, Qantas said it would save $100m per year on labour costs, plus $80m on ground-handling equipment over five years.
Justice Lee’s judgment suggested the savings have been significantly lower – in the vicinity of $20m – but he acknowledged the perceived financial gain for Qantas was “enormous”.
Furthermore, financial statements posted to the ASX show Qantas has been making provisions for the outcome since losing its High Court challenge in 2023, tipping in $135m over the past 18 months.
Certainly Qantas investors did not show a lot of concern, with the share price closing just 5c lower on Monday at $11.58 and sinking a further 20c on Tuesday.
Australian Shareholders Association chief executive Rachel Waterhouse said the financial penalty was unlikely to trouble the company at all.
“The real challenge now for Qantas is repairing its reputation and rebuilding trust in the management and board,” Ms Waterhouse said.
“While Qantas has accepted the court’s decision, from a shareholder perspective the absence of CEO Vanessa Hudson from the hearing, despite her direct involvement as chief financial officer at the time, weakened the impact of the apology which followed.
“Genuine accountability is best demonstrated by presence, and a written statement alone falls short of rebuilding trust.”
Clayton Utz head of workplace relations, employment and safety Dan Trindade said it was possible the penalty would not have the deterrent effect intended.
But he said employers should ensure potentially unlawful conduct was not simply seen “as the cost of doing business”.
“The next employer facing a similar situation might be expected to receive an even greater penalty.”
Ms Hudson issued a further written apology for the outsourcing on Monday, and in his first public aviation speech since departing Qantas in September 2023, former CEO Alan Joyce last week “acknowledged” that during Covid-19, challenging decisions were made about the workforce.
Qantas will report its full-year result on August 28, with another bumper profit expected after a $1.4bn underlying profit before tax in the six months to December 31, which was up 11 per cent on the previous corresponding period.
In the previous financial year, Qantas achieved a $2.1bn profit – down on the airline’s record $2.47bn in 2023, on the back of exorbitant airfares and off-the-scale demand.
Ms Waterhouse said it was imperative Qantas did not repeat the mistake of prioritising short-term financial outcomes at the expense of employees and other stakeholders.
“The court has imposed accountability for the unlawful sackings,” she said.
“This judgment is a clear reminder that governance failures if left unchecked, will ultimately erode reputation, trust and long-term value.”
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