Just hours after being unveiled as the next chief executive, Vanessa Hudson was already facing questions about how she plans to repair Qantas’s reputation with the Australian public.
At Qantas’s Sydney headquarters on Tuesday morning, Hudson – who is currently the chief financial officer and has spent 28 years working across the aviation group – sat with the outgoing chief executive, Alan Joyce, as she told reporters how she would solve the issues that arose during his leadership when she takes the controls in November.
Joyce’s 15 years as one of Australia’s best-paid CEOs has been punctuated by controversies, including when he grounded Qantas’s entire fleet in 2011 amid an industrial dispute, as well as the outsourcing of 1,700 ground handling jobs in 2020 that was later ruled illegal, for which the airline faces a mammoth compensation bill if the high court upholds that ruling next week.
On Tuesday, Hudson spoke of “being transparent and also having mutual trust” with the union movement – a dynamic which had become combative during Joyce’s term.
“I’m also looking forward to meeting unions and union leaders and I look forward to developing a constructive relationship with them,” she said.
In a sign of just how tense Joyce’s relationship with unions has become, he took a parting shot.
“The thing that makes Qantas special is its people, and there’s a difference between our people and the unions, sometimes people forget that our people are highly engaged,” Joyce said.
Union officials appear cautiously optimistic of Hudson’s more cooperative tone.
Michael Kaine, the national secretary of the Transport Workers Union (TWU) – which led the legal case against Qantas’s outsourcing of ground handlers – said he feared Hudson was “cut from the same managerial cloth” as Joyce.
“But we are willing to suspend that judgment because this is an opportunity,” he said.
More recently, a post-pandemic deterioration in service, including surging rates of mishandled baggage, delays and cancellations, in conjunction with soaring air fares, saw Qantas plunge 31 places to be Australia’s 40th most trusted brand last year.
Hudson acknowledged “customer experience was not where we wanted it”. “We’ve got to win their support,” she said, and among other initiatives noted “a new pipeline of renewing our fleet” – a key issue for the airline.
The average age of its planes is about 15 years, up from about nine years when Joyce began as CEO in 2008.
Qantas’s fleet is significantly older than its international competitors, posing increased maintenance and running costs amid a parts shortage at the same time as aircraft manufacturers work through Covid-related delivery backlogs affecting all major airlines. Meanwhile, some of Qantas’s fleet remains mothballed in desert parking lots.
Joyce and his influence still loom large over the airline.
When the stock market opened on Tuesday, shortly after Qantas alerted investors of the succession plans, shares in the airline fell more than 2%, substantially further than the broader market.
While such a sharp movement can happen when investors are surprised, Joyce had previously announced he would be leaving.
Vas Kolesnikoff, the head of Australia and New Zealand research at governance group Institutional Shareholder Services, said the price movement reflected the size of the shadow Joyce casts over his successor.
“He is a powerful CEO and one of the most well known in the country,” said Kolesnikoff. “He navigated difficult times.”
After taking over at the onset of the global financial crisis in 2008, Joyce has seen the airline through several difficult periods, which included rapidly rising jet fuel prices early in his tenure. By late 2013, Qantas shares were trading at just over $1 a share, a fraction of their former value.
The airline’s financials and share price ultimately recovered, which the company attributed to a “transformation plan” that stripped billions of dollars of costs out of the airline.
At times of financial duress, Joyce would repeatedly turn to cost-cutting strategies that were bitterly opposed by workers and their representatives, but supported by shareholders.
“Joyce certainly cut a lot of costs over the years and was well remunerated for it,” Kolesnikoff said.
Qantas’s financial standing was helped by the almost $2bn in jobkeeper and other government subsidies during the pandemic. It has reduced its debt from a peak of $5.8bn to $2.4bn and began a $500m share buyback in February as it posted a record $1.43bn half-year profit.
After a Covid dip and a raft of brutal staffing decisions, its share price has since recovered almost to its pre-pandemic highs of more than $6, notwithstanding the pullback on Tuesday morning, as investors ponder what a post-Joyce Qantas will look like.
