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Is Alan Joyce "worth it?"

Melburnian1

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I am not the number one fan of Australia's unions - far from it - and any article about another person reflects the writer's biases and perhaps personal dislikes, but this article makes some very good points about QF's ageing fleet - for me, the failure to renew the domestic aircraft is a standout about which I've previously commented - and QF's financial performance - not stellar every year - under Mr Alan Joyce as CEO:


Mr Joyce is terrific at generating publicity - witness the Project Sunrise flight where he has conned the media into believing it was a "commercial flight" when it only had 49 passengers (and no one in whY) - but among other "achievements" he may be remembered for cutting the catering. A first world problem but important to many travellers.

Another standout is how QF's and JQ's punctuality and reliability leaves a heck of a lot to be desired. See the appropriate delays/cancellations threads on AFF. Many QF and JQ delays internationally stand in contrast to lots of foreign airlines that manage by and large to operate reliably and punctually to and from Australia. As AFFer Mel_Traveller has frequently commented, JQ loves to cancel flights, particularly ex and to MEL.

The cancellation rate in many months of above six per cent on our busiest domestic route, MEL - SYD and return, for QF flights is appalling. It isn't all due to weather.

QF's profitability on international routes is nothing particularly marvellous. Domestically it's up against a relatively weak competitor in VA that incurred massive losses under Mr Borghetti, and is now probably about to rationalise its offerings, so making money is easy for QF.

While it's "no news" in the sense that anyone with a modicum of commonsense ought know this occurs (and not just with QF), the redemption value of FF points has repeatedly been reduced, as Mattg of AFF has so sagaciously written about more than once.

QF fares generally are extremely high. I save a lot of money by not patronising it, and on Asian airlines receive the excellent service that is not always the case with QF, while the aircraft these Asian competitors use are often more modern, while such airlines also have a good safety record.

Mr Joyce's repeated incursions into social policy matters outside the ambit of an airline is extremely annoying and something I ignore, but that's strictly outside the scope of an aviation forum. Stick to fixing the airline!

A hugely overrated airline complemented by what many may suggest, including Mr Purvinas, is an overpaid CEO at QF.
 
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TheInsider

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Not worth it at all.
The amount of 'managers' there are again is just abysmal, but always looking after their own.

The amount of people there are in 'the street' in the Mascot 'campus' having coffees all day is a joke. They are always so busy, but don't actually do much at all.
 

dajop

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Whilst I don't think he's worth that much per year. Let's get straight the media myth that he is paid $24m a year. He is not. That is fake news. He is paid about $10m a year. The question should be is he worth $10m per year?

He achieved $24m in one year, which included $14m in stock appreciation, after tanking the stock to $1, he then was able to resurrect to the share price it is today. Whether it was all smoke and mirrors is the question ( I think it was), but it worked for him personally and anyone who bought in at $1. But chances of repeating that extra $14m again (i.e. due to more stock price increases), probably exceedingly low. Especially when the chickens will one day come home to roost.
 
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Melburnian1

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Not worth it at all.
The amount of 'managers' there are again is just abysmal, but always looking after their own.

The amount of people there are in 'the street' in the Mascot 'campus' having coffees all day is a joke. They are always so busy, but don't actually do much at all.
While airline staff do not always endear themselves to passengers, one has to feel for staff who are besieged by 100 or 300 patrons wanting to know why a flight is cancelled, or an aircraft delayed.

The 'disease' you speak of is not restricted to QF, not that this excuses it. It was easy during my working life to work out who produced the goods and who in contrast was just a BS individual with style not substance. Unfortunately many of the latter tend to "get ahead" in a material sense but they know deep down others don't respect them, and that's what they fear or hate. This may explain why they, as you say, "protect their own" but I am not a psychologist.

Presumably while the domestic profits continue there's no pressure on AJ to cut managerial numbers. However the 0.2 per cent overall rise (across all airlines, and way below population growth of 1.7 per cent pa) in Oz domestic passengers for August 2019 shows how the numbers are flatlining, so this must not be a help to quickly increasing profits.
 

BAM1748

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Of course he isn't worth it, who is to say anyone of us here couldn't do the job. Have a good team who helps you win.

Of course, the career expectancy of people at this level is sometimes very short, so he needs to make the hay while the sunrise shines.
 

dajop

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However the 0.2 per cent overall rise (across all airlines, and way below population growth of 1.7 per cent pa) in Oz domestic passengers for August 2019 shows how the numbers are flatlining, so this must not be a help to quickly increasing profits.
It depends, is the 0.2% rise a result of people not wanting to travel, or a result of people being priced out of travel because of "capacity discipline" by QF and VA (throttling capacity, which leads to price increases). When you have a cosy duopoly, no need to grow the market, shrinking the market can work very well profitability wise, especially when barriers to entry to the market are extremely high.
 

moa999

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He achieved $24m in one year, which included $14m in stock appreciation, after tanking the stock to $1, he then was able to resurrect to the share price it is today. Whether it was all smoke and mirrors is the question ( I think it was), but it worked for him personally and anyone who bought in at $1. But chances of repeating that extra $14m again (i.e. due to more stock price increases), probably exceedingly low.
His base salary is just over $2m
Then there are a combination of short term (typically one year financial goals), long term, and options (direct share price correlation).

Remember also a CEO can't tank a share price - that's the market dynamics - and they typically look through one off losses and the like. At the time the outlook for airlines globally was pretty poor. Yes they wrote stuff off (which had probably been overvalued by the previous regime), but all airlines were doing this at the time and many bigger losses.

The reality is since that time, only one of our two airlines has been kicking goals.
 

drron

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Very interesting article.Compared to his US airline CEOs very definitely his pay is too high.
Delta.CEO $13.5million or 142 times his employees median pay of $93316.

AA. CEO $12.2 million or 195 times his employees median pay of $62394.

United. CEO $9.5 million. or 115 times his employees pay of $83122.

Now Alan Joyce with total package of $A24.9 million.Or $US17.1 million.FAs median pay last year $60000.If we take that as QF staffs median pay that means AJ earns 422 times his staffs median pay.If we take a higher figure say $90000 he is only getting 277 times his staffs median pay.
 

dajop

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Now Alan Joyce with total package of $A24.9 million.
But that is not his "total package" in a recurring sense. A valid comparison to Delta, United and AA CEO's would include the value of base salary, short term incentives (bonuses), share and option grants/realisation. The comparable figure for AJ vs other CEO's is $9.997m AUD (which is what it cost QF to renumerate AJ in 2018/9.

The remaining $15m cost QF nothing in 2018/9 (well directly, many would argue it has costed QF a lot ...) and does not appear on their books, as it is a result of gains in share prices from earlier options that had vested and shares he was granted earlier. The figures for UA, DL and AA CEO's do not disclose how much they've gained as a result of share price increases, merely the value of the shares they were granted.
 
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trippin_the_rift

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Very interesting article.Compared to his US airline CEOs very definitely his pay is too high.
Delta.CEO $13.5million or 142 times his employees median pay of $93316.

AA. CEO $12.2 million or 195 times his employees median pay of $62394.

United. CEO $9.5 million. or 115 times his employees pay of $83122.

Now Alan Joyce with total package of $A24.9 million.Or $US17.1 million.FAs median pay last year $60000.If we take that as QF staffs median pay that means AJ earns 422 times his staffs median pay.If we take a higher figure say $90000 he is only getting 277 times his staffs median pay.
AA, CEO - Doug Parker - has a $0 salary.
His AA remuneration comes from stock options.

Remember it's the board of directors who sign off on the CEOs remuneration. They represent the shareholders. Therefore, if the shareholders are happy - what's the problem?

There are bigger problems in the world.
 

drron

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Yes and those packages for US airlines include all the things that AJ has in his package.They also go up and down with the stock price.
For example the Delta CEO has a base salary of $US800000.Most of the rest is stock.
So sorry it is really comparing a little apple with bigger apples.
 

dajop

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Yes and those packages for US airlines include all the things that AJ has in his package.They also go up and down with the stock price.
For example the Delta CEO has a base salary of $US800000.Most of the rest is stock.
So sorry it is really comparing a little apple with bigger apples.
Yes AJ's 2019 $9.997m package did include this as well... including the value of the increase in value of the shares that vested during 2017-2019, that was dependent on the stock price (this came to $3m). This was quite separate to the extra $15m that did not cost QF anything and related to increase in value of previously vested stock/options.

Essentially the $15m was a return on AJ's investment in QF (although IIRC tax department see it as income not capital gain, depending on declarations I think). He could have sold those stocks/options as soon as they vested and he would have earnt $0 in 2018/9 on that component. That component isn't even reported in QF's books, it was dug up by a researcher.
 
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jastel

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It is an obscene amount of money for 99% percent of us but no different to bankers, politicians, actors and many others whose income vs their good to society can be debated.
I did see an interesting thing the other day on TV where he was saying Qantas has a ROI of 10% or something and the actual airports have a ROI of 40%...caused by massive parking fees, shop rentals, landing charges etc so we are getting ripped of everywhere we turn.
 

newbuyer1976

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Shouldn't the real question be whether he has positioned QANTAS for a future? If he hasn't then any payment is too much.
I’d like to think he has. Fortuitously or not, waiting so long to commit to 738 replacements can be seen as a win now that MAX is under real price pressure. The Intl division is more of an open wound and less of stage IV cancer. I’m not sure Project Sunrise will be that significant profit centre but shows the ability of the executive team to test the boundaries.

However what irks me is the level of inconsistency in the business that has, ironically, stayed pretty consistent. And is it really that hard to keep customers abreast of what’s happening to a delayed flight and how they plan on getting us moving? It seems like some investment in this area can make Qantas a bleeding edge pioneer in customer service. I’d argue that would be a much better appreciated innovation than cuddle class seats or a day long non stop flight.
 

dajop

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Remember also a CEO can't tank a share price - that's the market dynamics - and they typically look through one off losses and the like. At the time the outlook for airlines globally was pretty poor.
Oh they certainly can tank a share price, perhaps not so deliberately so as to pick up a nice windfall on the way up, but definitely their decisions have a bearing on the share price.

At the time, whilst the whole industry faced fuel price challenges (which caused a lot of hurt at QFi), it was ultimately the capacity war with VA that was causing Qantas a lot of hurt, which eroded the profitability of QF's cash cow - QFd. It was a blip, and now QFd has been restored to its previous profitable status, after both VA and QF realised it was no-ones interest to continue expanding capacity to secure market share at the expense of profits. It could be argued the 2014 result was an investment in QF's future. Now some of that was also a result of cost cutting and re-structuring, but the capacity discipline that both QF and VA display now domestically means both run profitable domestic operations, but QF far more successfully than VA (and their wishy washy strategy)
 

Brettmcg

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Once I read the name of the author, I wasn't particularly interested in reading much further.

Might just be me, but I'm not sure I see the relevance of this thread to the QF Frequent Flyer program?
 

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