The Guardian August 7, 2002

Rolling in loot, Qantas cries poor

by Peter Mac

Members of the Australian Services Union (ASU) employed by Qantas Airways 
last week held a 12-hour strike over demands for a five percent wage 
increase, as well as commitments from the airline over job security, job 
sharing and contracting out arrangements.

Qantas management, which last year imposed a freeze on its employees' wage 
levels, has offered only a three percent rise, to be introduced over a two-
year period.

The Assistant National secretary of the ASU, Linda White, last week 
commented bitterly that over the past two years company executives had 
helped themselves to hefty increases while normal employees received no 
increase whatsoever.

In addition, Qantas had a massive increase in profits. For the fiscal year 
2002 it reported a pre-tax profit of $605 million, a 10 percent increase 
over the previous year.

The last financial year saw the collapse of Ansett and a consequent huge 
rise in domestic passenger numbers carried by Qantas.

The airline now carries more than 80 per cent of the domestic market. 
Despite this, its chief executive, Geoff Dixon launched a bitter attack 
over the industrial action, claiming that the airline was skating on 
financially thin ice.

Qantas is intent on a massive expansion, with a view to becoming one of the 
biggest airlines in the region.

It has committed itself to a $13 billion upgrade of its fleet and 
equipment, is negotiating to purchase a 25 percent share in Air New 
Zealand, and is looking at a further bill of $11 billion for upgrading 

It is also seeking to overthrow a key element of its operational structure, 
i.e. its constitutional requirement that total foreign ownership of the 
company be limited to 49 percent of its shares.

Management claims that this increases the cost of raising funds for 
expansion, and that despite a 25 percent surge in the value of Qantas 
shares in the last few months, the requirement had suppressed the share 
price by "up to 20 per cent".

Whether true or not, this would not justify removal of the foreign 
ownership rule. The major beneficiaries of lowering the cost of raising 
funds, and of increasing the share price, are the company shareholders.

As Australia's major carrier, providing an essential service where 
distances within Australia and between other countries are great, the need 
for a cheap, efficient and reliable service is vital.

As a privately owned corporation, the prime purpose of Qantas's operations 
is to generate profits for shareholders, to accumulate wealth and to become 
bigger and bigger.

As a private-for-profit company the airline services which are so crucial 
to our national development, travel and trade, have become secondary to the 
profit-generating motive.

The effect of removing the foreign ownership cap would lead to foreign 
control, and decisions about the operation of the company, sackings, and 
its employees' wages and conditions being determined in the boardrooms of 
Singapore, London or where ever.

The control and ownership of this company should not only remain in 
Australia, but be restored to the people of Australia through public 
ownership and government control.

Senate vote crucial

The 49 percent foreign ownership stipulation was included in the Qantas 
Sale Act, the federal legislation under which the organisation was 
privatised many years ago, as well as in the company's constitution.

Therefore, any action to remove these constraints would require the co-
operation of the company shareholders and the Federal Government.

Qantas management has expressed confidence that its shareholders would 
approve the change to the company's constitution.

For its part, the Federal Government has advised the company that it will 
make a decision on legislation before the company's board meeting at the 
end of the month.

Given the Government's approach to the full sale of Telstra, in which 
similar principles are at stake, it seems highly likely that it will favour 
repeal of the Act.

However, as with the Telstra sale, the approval of the Australian Senate is 
crucial. The Qantas and Telstra issues are both due to be considered by the 
Senate, which resumes sitting later this month.

The Coalition is just short of a majority in the Senate, and the actions of 
(former Democrat) Senator Meg Lees and the right-wing (still Democrat) 
Senator Andrew Bartlett are therefore of major interest to both Qantas and 
the Government.

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