The Government will discuss if it will provide a debt guarantee for Qantas.
Following on from Thursday’s announcement by Qantas that it will shed 5000 jobs on the back of a $252m loss, today the Federal Government will discuss whether to provide a debt guarantee for the national carrier.
Qantas has asked for a Government debt guarantee to secure the future of the airline as the national carrier, however, such a guarantee would not prevent the job cuts already announced.
After union officials met with Qantas management on Friday, they said that the company had plucked the number of jobs to be lost “out of the air”, reporting that the CEO, Alan Joyce, couldn’t table from where the retrenchments would come. Labor has vowed to block any move to shift Qantas maintenance operation outside Australia and will also attempt to veto any majority foreign ownership. Prime Minister Tony Abbott strongly supports changes to the Qantas Sale Act to allow greater foreign investment, however Alan Joyce has said this will not help the airline in the short term.
While the Treasurer Joe Hockey had hinted in recent weeks that the Government would be open to supporting the move, Mr Abbott has all but decided this will not be he case, making it known via his comments during Thursday’s question time. Transport Minister Warren Truss has gone one step further, telling the Weekend Australian, “I’ve always considered that government intervention is an absolute last resort, an absolute last resort. I think Qantas is quite a long way away from being at a critical point; it has still got a debt rating two points higher than Virgin’s.”
Virgin Australia’s chief executive John Borghetti warned that a debt guarantee was counter to free enterprise and a free market. Mr Borghetti, who announced a loss of $83.7 million for Virgin last week, said the best assistance the industry could be given was the removal of the carbon tax, which he said, “has cost the industry hundreds of millions of dollars and to that end may I just say we applaud the government’s position on this”.
Read more at The Australian.
That an international airline is looking to the Government to back up its debt is simply ridiculous, that the board of said company keeps backing Alan Joyce is laughable.
How important is having a national carrier and can we really consider Qantas to be that airline? While it may have the kangaroo on the tails of its planes, Qantas has long since ceased to be Australian. Gradually moving its maintenance operations off shore, opening up routes from Australia to Emirates through code share agreements and charging more for flights on similar routes than other airlines, has signalled that the airline can no longer operate as the Sprit of Australia.
Alan Joyce has long borne the brunt of public outrage at the demise of the flying kangaroo, yet the Qantas board continue to back him. Any other chief executive who announced losses to the extent of those suffered by Qantas would find himself on the first boat back to where he came from, but not the Teflon-coated Mr Joyce. Taking no responsibility for the crisis Qantas finds itself in, Joyce has gone cap-in-hand to a Government which has already flagged cuts in education and health to beg or blackmail for a debt guarantee, which wouldn’t actually save the airline from more cuts. It’s time for the Government to look at the bigger picture and make a decision based on sound economic principles rather than nostalgia.
Coming hot on the heels of other mass job losses in the manufacturing industry, 5000 retrenchments is not to be ignored, but rather than simply providing a debt guarantee, for a business which can’t sustain itself, the time and effort would be better spent working out a positive solution for those who will lose their jobs and supporting ventures which provide a more diversified workforce. It may also be worth noting that our big four banks have a debt guarantee in place and this hasn’t helped the consumer one bit.
As tough as it may be, the time has come to cut Qantas free.
Do you think the Government should back Qantas’s call for a debt guarantee? Or should it rush through legislation which enables the airline to seek a majority foreign ownership? Do you still prefer to fly Qantas?