Qantas’ Alan Joyce is playing a bad hand well

Alan Joyce at the Queensland Futures Institute event in Brisbane in February. Picture: Di East

Qantas boss Alan Joyce didn’t say so directly, but he has hinted consumers may have overreacted to the coronavirus, noting more people have recovered from the disease than have it.

He may well be right, and the economic impact is related to the steps taken to isolate the disease rather than the disease itself.

The stock market has recovered from early losses helped by talk of US tax cuts and of course ahead of the stimulus package expected this week in Australia.

The concerns now centre on companies with big debt levels like Virgin which increased net debt by 28.3 per cent to $5 billion to buy back the rest of its Velocity frequent flyer business.

It should be noted Virgin has $1.2 billion in cash. That’s not much less than Qantas, which is three times bigger.

Still Qantas’ stock price has recovered from early losses to be down just 0.7 per cent in lunchtime trade, while Virgin is still down 12.5 per cent at 7c a share.

It has yet to unveil more capacity cuts to match Qantas, but a statement is pending.

Qantas shareholder Franklin Templeton’s Andrew Sisson also put some sense around the market falls. “We have had a correction from market complacency, which is replaced by a more realistic view,” he notes

Put in that context, the market rout is almost a positive.

Qantas seems to be gearing up for staff cuts, or at the very least to put some fear into the heads of its pilots, who still have their hand out for a 3 per cent pay rise.

Alan Joyce will take a 25 per cent pay cut this year, which will cut his fixed pay from $2.1 million to $1.6 million. His bonuses are also gone.

This is not the same hit as the $8.6 million drop in the value of his 2.7 million Qantas shares.

Chair Richard Goyder’s pay will also fall $152,000, to $450,000 but both he and Joyce will be able to pay the rent.

Still, in terms of publicity ahead of potential staff cuts a brilliant move.