Australian Senate summons Qantas chief as airline reports record $2.47bn profit

The Australian Senate has summoned Qantas Airways chief executive Alan Joyce to appear before an inquiry into the cost-of-living crisis as the carrier reported record full-year underlying profit of $2.47 billion (€1.47 billion), backed by strong travel demand and high ticket prices.

The 2022-23 financial year results mark a stark change from a year earlier, when it fell to a $1.86 billion loss.

“This is a remarkable turnaround, three years in the making. And it’s been hard,” Qantas’ outgoing chief executive Mr Joyce said. “Fundamentally, travel demand is extremely robust.”

Australian international air fares have surged even after major costs, including jet fuel, have fallen from the high prices recorded early last year after disruptions to global oil supply.

All financial metrics accelerated at Qantas. The return-on-invested-capital measurement, which tracks how well a company generates profits, increased to 103.6 per cent, an almost mythical figure. This compares with a return of less than 20 per cent before the pandemic.

Qantas’ domestic earnings before interest and taxes (EBIT) – an indication of profit margins – jumped to 18.2 per cent, representing a 50 per cent increase in profit margins over the past six years. Typical profit margins for domestic aviation operators in Australia have traditionally been between 8 and 10 per cent.

Vanessa Hudson, the incoming CEO who will replace Mr Joyce in November, said there was room to further improve Qantas’ financial situation. “It’s not as good as it gets,” she said.

But the Qantas results will be a bitter pill for some travellers, who have experienced a disrupted period of travel, punctuated by very high air fares.

On Wednesday, in advance of the airline’s results release, Australian Labor Party senator Tony Sheldon revealed that Mr Joyce had resisted a request to answer questions before a Senate select committee hearing on Monday in Melbourne.

Guardian Australia understands Mr Joyce repeatedly refused to appear voluntarily, and only confirmed his attendance after being issued with a summons – an unusual measure for senate committees to take.

Senators plan to grill Joyce on stubbornly high ticket prices, Mr Joyce’s personal bonuses, ground handler outsourcing and a Qantas travel credit scheme, which is now the subject of a class-action lawsuit claiming the airline treated $1 billion in customer money held from Covid-19 cancellations as interest-free loans.

Mr Sheldon, a fierce critic of Qantas and a former official at the Transport Workers Union, which has had a combative relationship with the airline, accused Mr Joyce of “almost a decade of evading parliamentary scrutiny”, having last appeared before the Senate in 2014.

A Qantas spokesperson said in a statement: “Qantas was invited to attend a cost-of-living Senate Committee hearing and to nominate relevant executives, which we did. Despite no other company CEO being required to attend, the committee subsequently insisted that Qantas CEO Alan Joyce appear, which he will do.”

On Wednesday, a separate parliamentary inquiry into promoting economic dynamism heard accusations that the national carrier, its budget outfit Jetstar and competitor Virgin Australia, have been hoarding take off and landing slots at Sydney Airport to shut out smaller airlines.

Sydney Airport called for any airline that cancels a flight more than 5 per cent of the time to lose its scheduled slot – tighter than the 20 per cent allowance under current legislation – to deter the major airlines from strategically scheduling then cancelling services.

Qantas’s strong recent financial returns have been described as “obscene” by the Australian Transport Workers’ Union (TWU) after the airline received generous government pandemic payments and outsourced ground handler jobs. TWU national secretary, Michael Kaine said: “This is $2.5 billion of dirty money reaped from illegal outsourcing, overzealous redundancies, price-gouging, hoarding cancellation refunds, and the decimation of service standards”.

On Thursday, Mr Joyce said sickness and technical were responsible for other cancellations, and accused Sydney airport of being “monopolistic” and seeking to maximise profits. – The Guardian