Flying In Crosswinds

1 July 2009

Qantas Chief Executive Officer Alan Joyce addressed a Committee for Economic Development of Australia (CEDA) lunch in Melbourne, outlining Qantas' approach to managing through this downturn and creating a platform for the future.

Qantas Chief Executive Officer Alan Joyce to Committee for Economic Development of Australia, Melbourne, 27 May 2009

Ours is a portfolio business: we really are the Qantas Group. It means we can use our scale, skills and flexibility to manage the present volatility. We have two of the world's best airlines in their categories in Qantas and Jetstar. This gives us the capacity to mix and match our offerings to meet and stimulate customer demand.

We have maintained a strong balance sheet and an investment grade credit rating. We have successfully gone to the market to raise more funds. We have financing facilities in place to cover our aircraft purchase obligations to October 2010. And we have strong liquidity with more than $3 billion in cash. So we are well prepared if the economic "glimmers of hope" turn out to be false dawns, and the downturn extends for some time. And we are positioning ourselves to grow and prosper when things do improve.Our long-term vision is to have the best premium and low-cost airlines able to deliver on behalf of our shareholders.

We will achieve this by ensuring that the Qantas and Jetstar brands stay strong, and by matching the right aircraft with the right configurations to the right routes. Safety is our number one priority and underpins all that we do.In terms of our customers, our goal is nothing short of excellence. Qantas has invested $1.7 billion in new product over the past five years, including lounges and aircraft interiors. All our executives, and now about 20,000 staff, are being trained through our new Centre of Service Excellence. So far this year, an average of 88 per cent of Qantas domestic flights are taking off on time. The figure would be higher but for some recent difficult weather around the country. Qantas international on-time performance has been steadily improving since last year's industrial disruptions and we are now on track to post our best monthly on-time performance in six years. What is really good news is that the level of customer satisfaction with Qantas in 2009 has improved significantly and is now at its highest level in five years. Our long-term competitiveness depends upon achieving maximum operating efficiency.We have recently gone to major suppliers across all parts of our business.

IT and telecommunications vendors, certainly, but also airports, providers of uniforms, crew accommodation and engineering spare parts among others. With all our vendors, we are looking at ways we can, together, drive down costs and share the savings. A key area for us is airports because Qantas pays out more than $700 million each year in airport charges, property costs, licenses and staff car parking. Sydney is a particular issue for us. It is our home base, the gateway to Australia and the busiest airport. Then there's Brisbane, which has imposed a 30 per cent increase in domestic charges on Jetstar. We are in discussions now with Sydney and Brisbane among others, and we hope that a spirit of mutual benefit will prevail to ensure we can all keep planning positively for the future. At Qantas we are shaping a distinctively Australian Group that is globally competitive. Our people have been doing a fantastic job, often in very challenging circumstances. With their continuing support, we will have unrivalled capacity to meet and match customer demand across the full spectrum - from the world's first designer passenger aircraft with the A380, through to comfortable regional flying on our growing Q400 QantasLink fleet, to fantastic value and convenience with Jetstar. And it will all be managed by a more agile organisation - with a leaner cost base and a focus on high impact results for the benefit of our customers.If we get it right, we'll have managed through the short-term crisis well. More importantly, we'll be positioned for long-term success.

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