Monday 10 December 2018

How Joyce made Qantas soar again

The airline CEO says corporate leaders need to be significant as well as successful, writes Group Business Editor Dearbhail McDonald

Alan Joyce. Photo: Getty
Alan Joyce. Photo: Getty
Dearbhail McDonald

Dearbhail McDonald

Four years ago, the Sydney Morning Herald ran a page one splash calling on Qantas airline chief executive Alan Joyce to resign. The influential newspaper lamented the decline of Australia's national carrier, which had at that time posted a record Aus$2.84bn loss, declaring that its course under the captaincy of Dublin-born Joyce bore "all the hallmarks of a modern corporate tragedy".

Joyce (52), who last week was honoured by his home city in recognition of his contribution to the international profile of Dublin through his corporate leadership and commitment to social inclusion, never faltered.

But he recalls how members of his senior team, and many below those ranks, were simply mortified to say they worked for Qantas.

"People were embarrassed going to barbecues," recalls Joyce, who became an Australian citizen 15 years ago. "Some would claim they worked for the banks, it was embarrassing just how bad things were going for us at the time. Now they can go to barbecues and be proud to say that they work for this iconic brand, that they were part of the biggest corporate turnaround in history."

The turnaround of Qantas is truly historic. Last month, Joyce, who axed 5,000 staff in 2014 to help reverse the airline's fortunes, defied his critics and investors, some of whom are nervous about the airline's looming $700m fuel bill and the prospect of a trade war between the US and China, Qantas' key growth market.

That is when he presided over a record $1.6bn profit for the 98-year-old carrier that is aiming to make aviation history when it delivers Project Sunrise - an ultra-long-haul, 20-hour non-stop flight from Sydney to London - by 2022, the centenary of its first scheduled mail and passenger flight.

Qantas returned $500m to its shareholders and vowed to give $67m in bonuses to 27,000 front-line staff as a reward for a "fantastic result".

The $500m dividend brings to $1.3bn the overall return to shareholders that Joyce, who last year was named a Companion of the Order of Australia - the country's highest civil honour - has delivered since the hard yards of 2013-14.

It's not the first time Joyce - who earned his proverbial wings in Aer Lingus before following the path of many young Irish by emigrating to Australia, has made the journey from purported corporate wrecker to international corporate hero - surviving a brush with prostrate cancer along the way.

In 2011, three years after he was appointed chief executive, Joyce - with the backing of his board - grounded the entire fleet of Qantas, which carries 56 million passengers a year, in seven minutes. The high-stakes move was made in response to a long-running ground war with three unions, including pilots, whose strike action over pay and conditions Joyce believed would bankrupt the company. Pilots had no idea until they landed that a lockout, which lasted three days and broke the strike action, had started. Followed by arbitration, the lockout paved the way for redundancies and helped put Qantas on the runway to recovery.

At one point, the personal threats against Joyce were so grave that he was protected by a team of bodyguards, but Joyce refused to walk away.

"We needed to rationalise, we needed to change," says Joyce, who has since hired an additional 2,500 staff.

Joyce describes mixed feelings of relief, resolve and sadness after the emergency board meeting that gave the green light to the lockout. "The fact we couldn't negotiate a settlement was an indictment of everybody. I thought that was terrible," says Joyce, who trained in Aer Lingus alongside its now chief executive, Stephen Kavanagh.

Joyce - who declined to speculate on how his Ryanair peer Michael O'Leary should handle his forays with the unions - says his salad days in Aer Lingus, where management received training in mindfulness techniques he still deploys daily, helps him weather all manners of turbulence.

Joyce - one of Australia's highest-paid executives, taking home $10.9m last year - says Ireland owes a debt to Aer Lingus which, despite its origins as a wholly State-owned company, created a cadre of aviation enthusiasts who traversed the globe and has shaped Ireland's presence in, and domination of, the aviation finance and leasing sector.

"It was an amazing company," says Joyce, who met Taoiseach Leo Varadkar and President Michael D Higgins last week as part of a large trade delegation from Australia and New Zealand supported by the IDA, the Irish Australian Chamber of Commerce and the Trans-Tasman Business Circle. "Without it, you wouldn't have Tony Ryan, Michael O'Leary, Conor McCarthy or Willie Walsh."

When Alan Joyce, a gay man, left Ireland 22 years ago, it was partly for new career opportunities. It was also to escape the oppressive climate then in Ireland for gay people, despite the decriminalisation of homosexuality here in 1993.

Joyce says he was astounded by his special homecoming last week, when he was honoured by the City of Dublin in the presence of his mother Colette and other family members. Family has been central to his success. His late father worked three jobs to ensure Joyce and his brothers attended university while his mother, a cleaner at a sports complex, woke her four sons at dawn to get them ready for school before she went to work.

Joyce, who lives with Shane Lloyd, his long-term partner of some 20 years, says he was incredibly emotional when Ireland became the first country in the world where citizens voted in favour of marriage equality. "I got a job, as an Irishman and as a gay man, at one of the biggest companies and one of the most iconic global brands - talk about a meritocracy, talk about acceptance," he says.

"That was phenomenal. But I was very emotional when I saw the vote at home. It set a light on the hill for the rest of the world and that could not have made me any prouder of Ireland".

Joyce committed $1m of his personal funds to help the campaign for marriage equality in Australia, whose citizens also voted in favour of marriage equality last year following a postal vote that cost an estimated $100m.

He stood down vociferous attacks from many quarters for Qantas' support of the social change. He was also attacked by a pie-wielding protester who sat for three hours with a pie on his lap before throwing it at Joyce during an address at a corporate event. "It was a very homophobic attack," says Joyce, who is a vocal and visible supporter of a range of social issues including gender diversity and indigenous education.

Joyce, who had to toe the diplomatic line earlier this year when Qantas complied with demands from China that airlines operating in the country refer to the disputed territory of Taiwan only as 'Taiwan China' on their websites, is adamant business leaders cannot shy away from social and political challenges. "Most businesses miss the opportunity to be significant," says Joyce.

"Doing things like pioneering Qantas' [aviation first] Perth-London route is significant. Taking the first aircraft jet, being the first to create business class, delivering Project Sunrise. These are history moments that the company is stretching itself to do that make the business unbelievably significant in the world of aviation.

"Similiarly, in the community, making a difference for local communities and leaving that mark, that is really important for business. Businesses that miss that might be very profitable, but they can leave a feeling that they have let the community down".

Joyce says politicians have routinely told Qantas to "stick to the knitting", but adds that diversity and inclusion is the airline's knitting.

"Our brand has never been stronger," says Joyce. "It is appealing to generation Y and Z who want to work for a company that is socially conscious. Our brand is appealing to minority groups who are five times more likely to travel with an airline or buy a service from someone who thinks that company represents them.

"It is that [social] significance, not just the profitability and the P&L. If you're just focused on that, you are not doing your job as a CEO or as a leader. We need more leaders to champion inclusion because business needs to be more part of the community".

As part of Qantas' growth strategy, it is looking to exploit and grow its own customer base through Amazon-style "personalisation" and "owning the customer", according to Joyce, who has just been appointed as chairman of the One World Alliance, a cohort of global airlines that carry almost 500 million passengers a year and generate more than $130bn annual revenues.

The opportunities are significant for Qantas, which is investing heavily in the $372m customer loyalty arm it once contemplated selling, and in its frequent flyer and credit card programmes which grew at 7pc and 4.2pc respectively. Incredibly, of the 12.5 million frequent flyers in Australia (almost half of its population) 30pc of nearly all credit card expenditure in Australia are transacted on credit cards that can be used to earn Qantas points.

Joyce says that Qantas is the Madonna of the aviation industry, reinventing itself every decade. As he pivots towards new technologies, including drone batteries for short-haul flights, Joyce - a supersonic flight enthusiast - is contemplating a series of potential headwinds including a $700m fuel bill, most of which Joyce says Qantas can "substantially digest" this year.

Australia's economy, including its mining sector, has not experienced a recession for almost 30 years. But it is particularly exposed to China, Australia's biggest export market. "The Australia- China opportunity is massive," he says. "Everybody is looking at this [US-China] trade situation and wondering about how it could end."

How it will all end for this redoubtable Dublin-born executive is anyone's guess. But Joyce is in it for the ultra long haul and the sky is the limit - if he hasn't already his eye on the moon.

Name

Alan Joyce

Age

52

Position

CEO of Qantas since 2008, recently appointed chairman of the governing board of the One World Alliance

Lives

Sydney, Australia

Education

BSc (applied science, physics and mathematics), Dublin Institute of Technology.

MSc (management science), Trinity College, Dublin

Previous experience

CEO of Jetstar from 2003 to 2008, having previously spent 15 years in leadership positions with Qantas, Ansett and Aer Lingus

Family

Has been with his partner, Shane Lloyd, for some 20 years

Pastimes

Reading, jogging, mindfulness

Currently reading

The Heart's Invisible Furies by John Boyne

Favourite film

The Shawshank Redemption

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