Qantas is holding its annual meeting in Perth on the 21st of next month, a destination that most eastern states shareholders won’t be able to afford, even if they fly Jetstar or the opposition, Virgin Blue.
The notice of meeting contains nothing controversial, except the remuneration report, which has suddenly gained some interest following news in the annual report that departed CEO, Geoff Dixon, picked up almost $11 million all up for his last five months of labour at the helm of the national airline.
Mr Dixon’s total salary of $10.7 million in 2008-09 was down 12% on the previous year.
It included a base salary of $1.86 million and $657,500 in termination benefits. He retired as CEO last November and was replaced by Alan Joyce, but remained a consultant to Qantas until March 31 this year.
The news will again spark debate and criticism about executive salaries.
Seeing some foolish folk moaned about the solid pay rise to more than $12 million for BHP’s Marius Kloppers for the June year (and BHP did a lot better than Qantas, even if earnings fell, but cash flow hit record levels of $US19 billion). On that basis they should get really vocal about Mr Dixon and Qantas.
The Qantas annual report had this to say right at the start about the Qantas Mr Dixon left: he wasn’t mentioned by name.
"A priority for the new management team, led by Chief Executive Officer Alan Joyce, was to restore Qantas’ reputation for safety and reliability, which had been damaged by an industrial dispute and subsequent maintenance backlog; and two in-flight incidents.
"By January 2009, Qantas had regained its industry leadership in domestic on-time performance.
"In March 2009, on the basis of its preliminary investigations, the Australian Transport Safety Bureau found the in-flight incidents were related to manufacturing faults beyond Qantas’ control. And in June 2009, monthly customer satisfaction reached its highest level since 2003."
No reason was given who was in charge at the time. Mr Dixon was the long term CEO up till late last year.
Mr Joyce only took over in November and the in-flight incidents, other safety and reliability problems had been front page news before then.
Anyway, Qantas’ share price was steady yesterday at $2.78 as investors obviously looked at the report and comments by chairman, Leigh Clifford and CEO, Alan Joyce, and concluded that it was out of the woods, but not yet in the clear.
Specifically Mr Clifford said the airline is yet to see substantial improvements in business conditions.
He said in the annual report that there was significant uncertainty surrounding an economic recovery.
"The global economic outlook remains uncertain and we are yet to see substantial improvements in underlying business conditions," he said.
"Many factors are in play that could affect the timing of the recovery.
"Uncertainty is also being created through significant capacity increases, domestically and internationally, by Qantas Group competitors, some of whom enjoy very favourable taxation and other arrangements."
The International Air Transport Association (IATA) forecast last week that international airlines would lose a record $US11 billion this year, up from an earlier forecast of over $US9 billion. Next year the losses would fall, but to around $US3.8 billion.
In August, Qantas announced a $117 million net profit for 2008-09, down 88% from the 2008 year. It lost money in the June half year.
Shareholders missed out on a final dividend, and were given no joy as to when payments would resume.
"With the interim dividend of 6 cents per share, Qantas has paid out 100 per cent of full year profit after tax.
“Under present circumstances, the Board considers it prudent not to pay a final dividend, and future dividends will be assessed against ongoing earnings performance and capital requirements," Mr Clifford said.
Mr Clifford said demand for flights has weakened in the second half of the financial year due to the economic slowdown, swine flu and increased capacity by competitor carriers.
In response, Qantas announced plans to cut costs by $1.5 billion over the next three years, starting with a target of $500 million this financial year.
That was after cuts of a similar size in the previous three years, with more than 3,200 employees sacked in the last year and a half.
But Mr Clifford said Qantas was well positioned to withstand the economic downturn and seize opportunities during a recovery.
The Qantas annual report also shows that former chief financial officer, Peter Gregg, received $4.9 million after serving just three months in the role last financial year. That included $1.76 million in termination benefits.
Mr Joyce, who was previously the boss of Jetstar, earned $3.7 million for the year to June, compared with $5.1 million in 2007-08.
