Qantas’ bloated profit is built on underpaid workers and overpaying passengers

The spirit of corporate Australia was laid bare yesterday when Qantas delivered a record bumper profit of $2.47 billion, a spirit built off the backs of outsourced and underpaid workers, unions say, and overpaying passengers.

Customers continue to pay significantly more for flying around and out of Australia compared with pre-COVID years. Successive compliant federal governments, whose members revel in their Chairman’s Lounge perks, refuse to lift a finger to improve the competitive environment — both domestically and internationally — allowing Qantas to keep world-leading airline margins.

This spirit also comes in the shape of yet another share buyback — this one for $500 million — designed to raise the share price and multimillion-dollar bonuses for senior executives and smaller boosts for senior managers. The share price duly climbed 5 cents to $6.22 ($1.36, or 28%, higher than it was a year ago).

These are numbers that shareholders’ dreams — and executive bonuses — are made of, but they infuriate workers and passengers. And despite its unprecedented bottom line, almost $1 billion more than its pre-COVID $1.6 billion, Qantas shows no sign of repaying the $2.7 billion in corporate welfare it received from the Morrison government during COVID, more than any other Australian company.

Grants, rorts and other tax breaks

This is a deeply concerning trend in Australia, where government welfare is moving away from regular people and into the corporate sector in the shape of government backing for the banking oligopoly and the continuing hands-off attitude to industrial-scale corporate tax avoidance. It’s a seemingly endless bucket of grants, rorts and other tax breaks.

Like most of its fossil-fuel buddies and global tech giants, Qantas is not paying any tax this year either. Due to Australian accounting rules, corporations can hoard losses to net off against profits in the good years — no matter that these have been underpinned by taxpayers. There are many ways to skin that cat. Qantas has paid only $411 million in company tax since 2010. It’s clearly time the rules were revised.

The standout division for Qantas last financial year was its domestic business, flipping from a $765 million loss in the 2022 financial year to a profit of $1.27 billion this year. This is 63% higher than what it recorded pre-COVID. The maths behind such a turnaround is relatively simple: boost revenue on the back of more customers paying higher ticket prices and keep screwing costs down.

“The only reward for the employees that keeps Qantas going, aside from a year-old announcement of a share scheme and bonus bribe attached to accepting wage freeze deals, is a $500 staff travel credit. A benefit that thousands of workers operating Qantas planes will not receive as their jobs are outsourced to subsidiaries or labour-hire firms,” the Transport Workers’ Union fumed.

“This report is no cause for celebration, but should be cause for every federal parliamentarian to commit to closing labour hire loopholes. Outsourcing good, secure jobs to 17 lower-paying subsidiaries and 21 external companies to send profits roaring into the multi-billions is as far from the fair go as you can get.”

Qantas will soon find out whether its High Court appeal is successful against the Federal Court ruling (twice) that it illegally sacked 1700 baggage handlers. If it fails, the company could be further challenged with employee court actions.

Should we be alarmed that Australia’s High Court judges are reportedly members of the exclusive, invite-only chairman’s lounge?

A workforce divided — and conquered

Qantas’ outgoing CEO Alan Joyce has divided and conquered the workforce — setting up more than two dozen companies to keep ratcheting down pay for pilots and cabin crew continues. Even long-term employees admit that pay and conditions in the pre-Joyce days were ridiculously good, but the general sense is that stripping salary and working conditions has gone too far. As elsewhere in corporate Australia, the differential between senior executive and regular workers continues to widen to a point where the the gap is, frankly, obscene.

Consider flight attendants. Those on legacy contracts (employed in 2008 or earlier) receive either $42.51 an hour (mainly domestic) or $56.48 an hour (mainly international). Today’s rates are between $30 and $37 an hour for some casuals, about $30 an hour for Qantas domestic, $24.37 an hour for Jet Connect NZ (flying Qantas flights to New York from Auckland) and $20.24 an hour for Qantas cabin crew UK.

For passengers, the numbers go the other way. In June, the Australian Competition and Consumer Commission released the last of a string of detailed quarterly reports on the sector — the last because Transport Minister Catherine King has cancelled funding for them, just when they are most needed.

It found the average return price for economy-class international airfares from Australia was $1827 — an increase of 51% on the 2019 price of $1213.

It said competition was at a “critical juncture” and “without a real threat of losing passengers to other airlines, the Qantas and Virgin Australia airline groups have had less incentive to offer attractive airfares, develop more direct routes, operate more reliable services, and invest in systems to provide high levels of customer service”.

But there is little relief in sight.

Joyce to front Senate inquiry

Indeed, fares are so high that Joyce has been summoned to appear before the government’s cost-of-living inquiry next week. Perhaps competition killer King, who recently nixed a bid by Qatar to increase its flights into Australia, should also appear.

“Qantas has transformed from an aviation pioneer into a pioneer of corporate greed, extracting every last cent possible from its workers, its customers and even the previous federal government,” said Senator Tony Sheldon, a former airline union boss.

Lastly, there are, finally, some orders for new long-haul aircraft in the shape of 12 Boeing 787s and 12 Airbus 350s — as tipped last month by Crikey. These are due to start arriving in 2027 over five to six years. There are options for 10 more A350s to replace the larger A380s from 2032.

The stretch to move towards only two long-haul aircraft is a good one. Passengers will be somewhat dudded as longer-range single-aisle planes are increasingly used for short international routes, such as to Bali and Fiji. But the 24 new planes are replacing 22 old ones. 

This means Qantas is not growing its international fleet to keep up with booming migration, which will see more migrants and young people in a population that is racing to 40 million. Along with compliant governments, this should help maintain high fares, and with capacity brimming — and Qantas’ commitment to cost-cutting — profits will continue to roll in.

As one Qantas insider said yesterday, “Joyce might be a prick, but he’s a smart prick.” 

That’s the spirit!

Is Alan Joyce a “smart prick” or just a prick? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.