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Singo slams Qantas – EXCLUSIVE with Peter Switzer

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by Peter Switzer

Legendary adman John Singleton has slammed Qantas management for its plummeting share price, its management of unions, its rating below Garuda airlines on international surveys and the calibre of its marketing. And he blames the company’s woes on Alan Joyce being the wrong man for the job.

“Qantas is one of only two companies — it and Telstra — where Australians see them as a reflection of themselves,” he said. “Qantas now is undergoing a crisis of management because a wrong decision was made about a CEO.

“There is nothing good about Qantas anymore — the marketing is wrong, its advertising is wrong, and the persona of the company is wrong.”

He highlights the company’s woes pointing to the share price, which was $5.44 in January 2008 but now trades for around $1.20. Mr Joyce was made CEO in November 2008.

Missing: leadership at the flying kangaroo

Singleton says there’s a leadership black hole at the airline after the company enjoyed years of strong executive and board leadership from the likes Gary Pemberton, James Strong, Margaret Jackson and Geoff Dixon.

“Nowadays there is an invisible chairman — does he make himself available for interviews? — and an invisible CEO in Alan Joyce, who is probably doing his best but every time he bobs up there’s more bad news,” he said. “He has no people skills and it’s all bad, bad, bad.”

Singleton says Qantas had two better candidates for the job — John Borghetti, now the CEO of Virgin Australia and Peter Gregg who now is CFO at Leighton Holdings.

He says the union’s relationship with the company is like the “bad old days” of the industrial landscape before the 1990s and reminds him of the mood that dominated during the pilots’ strike of 1989.

Singleton thinks the leadership has to be held responsible for the plight the company is in.

“When they start announcing record losses instead of record profits and the solution is no new planes, which makes you think it means more old planes, you know they haven’t got a clue,” he insisted.

Singo’s solution

Back in June it was reported that Singleton and a consortium, which could include the ex-CEO of Qantas, Geoff Dixon and investment banker Mark Carnegie, could be eyeing off the flying kangaroo.

Asked if the company was in his sights, he said when his business colleagues get together, Qantas is often a subject.

“We have always been interested in assets that are good value and given the share price you’d have to say it looks like good value.”

Asked if it was too simplistic to blame the CEO, considering other cost and competitive pressures, Singleton pondered why John Borghetti has been able to get it right under many of the same cost challenges.

“If Borghetti and Joyce swapped airlines, the Qantas share price would go up and Virgin’s would go down, no question,” he said.

Emirates move good, but is it enough?

On the Emirates hookup, he thinks it would be madness for Qantas to be a domestic only play, but he concedes Emirates is one of the best airlines he has flown on, so there’s merit in the move.

Macquarie Private Wealth research maintains a neutral stance on the company, though it likes the Emirates proposition.

“Clearly the pending Emirates announcement is a major positive catalyst which could help QAN’s international position,” Macquarie’s aviation analyst wrote recently.

But will that be enough? Singleton says no, comparing Qantas’ challenge to what Telstra faced before the arrival of the new CEO, David Thodey.

“If you had asked me about Sol Trujillo and how do you fix Telstra, I would have said ‘get rid of Trujillo’,” he said.

Why remove Peter Allen?

Singleton believes the effectiveness of an ad campaign says something about a company’s management. He believes the recent Qantas ad campaigns, which have succeeded his “I still call Australia home” commercials, demonstrate how the company has lost touch with its customers.

“That song was not my idea but I wasn’t stupid enough to get rid of it,” he admitted.

In fact, the adaption of the child choir singing around the world in later ads was Geoff Dixon’s idea.

“He rang me on Christmas Eve and told me we have to do it and he was absolutely spot on,” he said.

Important information:This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Watch more from Peter on SWITZER TV.

Published on: Friday, September 07, 2012

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