Episode Transcript
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S1 (00:01):
From the newsrooms of the Sydney Morning Herald and The Age.
This is the morning edition. I'm Samantha Selinger Morris. It's Tuesday,
August 19th. It may have once boasted one of the
most heartwarming advertisements ever to grace our screens, reminding us
that Qantas meant coming home.
S2 (00:25):
But no matter how far or how white I run,
I still call Australia. I still call Australia home.
S1 (00:43):
But in the last few years, the airline has weathered
multiple scandals and allegations of ripping customers off. And then
came Monday morning, when our national airline was slapped with
a whopping $90 million dollar fine for unfairly sacking staff. Today,
aviation reporter Chris Zappone on the harsh lessons that one
(01:07):
judge is trying to teach C-suite members about how to
treat staff with dignity and issue a proper apology. Okay,
so Chris, this fine is absolutely eye watering. What happened?
S3 (01:26):
Well, this dates back to the dark days of Covid.
So as airports shut down as lockdowns went into place,
Qantas made the decision that they were going to fire
about 1800 ground crew. And the idea behind it, as
it's emerged wasn't that this was just a response to
(01:48):
the conditions of Covid. It was also this strategy that
they had that if they got rid of this unionized staff,
it was going to pay dividends and having cheaper labor
costs down the line.
S4 (02:00):
Qantas and Jetstar are standing down the majority of their
30,000 employees until the end of May. The two airlines
are suspending all international flights from later this month.
S3 (02:10):
So they took this action, and I think in a
bit of the confusion of the time, it was anticipated
that there wouldn't be much of an uproar. Instead, the
Transport Workers Union came in immediately and contested it in court.
And that's what put us on the road to the
events that occurred today.
S1 (02:28):
Okay. And I think a lot of listeners are probably
like myself. We're a bit hazy about what was happening
during Covid, but like, was there a big reaction back
then besides from the union and how did Qantas actually
justify this decision?
S3 (02:41):
Well, I mean, there was a reaction, a big reaction. Well,
first of all, the way that Qantas laid these workers off,
in some cases, they were just called in to their
break room. They watched a video and they were told
you were stood down. And if you recall when Covid
was happening and the lockdowns were happening. This had a
dramatic effect on jobs, in transportation, jobs. You know, public
(03:03):
facing jobs. People were being sent home or kept at
home all over the place. So I think that that
potentially would have provided some cover. But behind that, there's
been this ongoing battle between Qantas and their unionized staff
for years. I mean, this has been a long standing aspiration,
(03:23):
I guess you could say, of the company to structurally
lower their costs on this sort of thing. And then
the unions have been pretty robust in their response. And
because it's transportation, it's an essential service. It's something that
needs to be done. And it was in this hazy
setting of Covid, when people's lives were being turned upside
down and transformed on an individual basis, that this was
(03:46):
going on in the realm of aviation in Australia. And
it created a situation that laid the groundwork for this event,
that we've seen this legal back and forth. So the
TWU took Qantas to court. There was a test case
where the workers, three workers, were found to have been
illegally sacked. After that, then the class action case could
(04:09):
come about backed by the TWU. That was itself basically
putting its legal money where its mouth was. They said
they had a case they were going to back it.
The government didn't come in. The Fair Work Commission didn't
come in and adjudicate on this. This was very much
the union taking on the airline.
S1 (04:26):
And of course, $90 million is such an enormous amount.
And I noticed that Justice Michael Lee, the judge who
actually decided this case, he said that Qantas decision to
sack all of these employees was carefully planned. So did
that element have anything to do with how large a
fine it is?
S3 (04:43):
Yes. I mean, this is another dimension of this long
running case. In 2021, when it was first contested in court,
the understanding of what had happened, it appeared that three
sort of senior level members of Qantas were the ones
that were organising this, and then it only emerged later,
after discovery in court, that the top member of the executive,
(05:05):
which was Alan Joyce, the CEO, most likely had knowledge
of what was going on. There was a presentation that
was being made to him that did not emerge until
after the 2021 court case. So, as Justice Leigh said himself,
he was left sort of uneasy with the understanding of
what actually happened at the corporate level within the company
(05:26):
in terms of this plan to get rid of these workers.
And so that, I think, filtered into some of his
decision making process about trying to create a deterrence for
more of this activity. He had a line about how,
you know that the court cannot essentially, they don't want
to be treated as fools by large corporations that are
doing this, that are taking the time to set up
(05:46):
sort of the legal setting that would seem to protect
those that are making these decisions and insulate them from
any sort of consequences. And justice Lee has been very
articulate on this point, and this seems to be what
is one of the motivating rationales for the penalty figure
that he's settled on.
S1 (06:06):
And I know that in the story that you've written
about this, we've got the Transport Workers Union national Secretary
Michael Kaine, saying of the workers who were initially sacked,
they weren't just sacked. They were told by Qantas that
they were delusional for questioning it. So what did he mean?
What did Qantas say to these workers in the very
beginning that suggested that they were delusional?
S3 (06:26):
Well, I with the exact wording, I'm not entirely sure.
But going back to justice Lee, he made the point
that Qantas has this reputation as a as a iconic,
not just company, but almost like an institution within Australia.
And it's sort of with that authority that it pursued
this case against these workers. And it's almost as if, um,
(06:48):
you know, they're making policy through corporate decisions, uh, and
that they weren't to be questioned. Uh, you know, they
were speaking from the authority of the executive suite of
this iconic 100 plus year old company. Um, and I
think that that's something where, uh, where, you know, there
was a real mismatch between Qantas actions, the words that
(07:09):
it used and the way it portrayed what was going
on with the workers, you know, even, you know, so
as as recently as last week, Alan Joyce had given
a speech. It was his first sort of public speech,
talking about, uh, talking about aviation. And he did, without
saying it directly, talk about, uh, you know, how aviation
(07:29):
responded to Covid. He used some term. He spoke about
how he acknowledged that hard decisions had to be made.
I mean, these are the things that at the time,
the justification was we're trying to, you know, we want
this company to survive and we're taking these actions for
the benefit of so shareholders, the public, the government and
society as a whole. So there's like this sort of grandiose,
(07:51):
you know, language around it. But I mean, that's pretty
cold comfort for people who are told, well, you know,
you're out of a job and you have no recourse
and you have no, you know, you have no right
to ask for you know, why this happened? Um, so
I think that that was part of the disconnect that, um,
that we saw being discussed today in the, um, judgment.
S1 (08:11):
And have we heard from Qantas about the fine? And
is this something that the company can appeal?
S3 (08:16):
They cannot appeal it anymore. It's gone. They'd already appealed it.
That's part of, I think, part of the demeanour of
Qantas that raised a lot of eyebrows, that they were
just going to fight this tooth and nail. So when,
when the, when they were found liable uh, in this case, they,
they immediately appealed it. And then that appeal was dismissed.
(08:37):
And actually it's at that point where the public support
or public perceptions of Qantas really cratered. It wasn't what
happened back in 2020, it was more that this was
a company that was going up against the court with
with a lot of confidence that it was going to
prevail and then getting pushed back, even as it sort
of escalated up the appeals process. Qantas has said that
(09:05):
they are going to pay the amount. They have issued
another apology, sort of a more detailed apology, but it
still sort of in the same vein in a in
a similar tone to what we've heard before from Qantas
on this issue. And so there is this sense, I think,
that the company, you know, the company is not fully
(09:29):
perceiving the vibe shift. I guess you call it around
the perception about what the company's behaviour has been towards
its employees, which for a lot of people is not
just for, you know, for a lot of people. They
see that reflected not just in, you know, employees, but
their experience of the company as customers and maybe sometimes
in this era that we live in their experiences, employees
(09:50):
in their own places of work. So I think it's
very emblematic for a lot of the public. Um, and
so there's quite a lot, you know, inasmuch as Qantas
is an iconic brand, this is sort of an iconic
moment in industrial relations in the country.
S1 (10:08):
We'll be right back. And so where does this actually
leave Qantas? Like can the company financially handle such a
massive fine?
S3 (10:17):
I think they can. They make a lot of money.
I think they'll be able to.
S1 (10:20):
I mean, I know they do, but it did give
me pause. I thought $90 million.
S3 (10:24):
No, look, it is a cost and it is a
material cost. So they had to go to the market and,
and flag with the ASX that this is something that
they will be that is going to be on their
balance sheet and profit and loss. They're going to have
to cover this. Um, the company is is actually, you know,
it's been very profitable since bouncing back from Covid. Again,
there's a little bit of the DNA of outrage in that, too.
(10:47):
If you remember some of the scandals with the ghost
tickets or the flight credits. So this was over $1
billion in flight credits that were amassed by Qantas because
of flights that were cancelled by Covid. And then, uh,
customers were told that they had to use these credits
by a certain amount of time, and if they didn't,
they would have to forfeit them. So in the end,
(11:07):
Qantas could pocket some of this money. Eventually, Qantas relented
and they changed some of the deadlines and made them
open ended. But again, it's a it was another you know,
it was another very ham fisted way of bolstering the
profit margin of the company, but seemingly at the direct
expense of, of the public. So, you know, Qantas is
going to, you know, Qantas will continue to push on. Um,
(11:29):
they will be able to to pay this down. Uh,
and it's interesting to note that their share price really
hasn't suffered because of this. I imagine from an investing perspective,
there's probably a bit of relief that this five year
saga is finally coming to an end. And yes, it's expensive,
but now there's a final price on it, you know? Now,
you know, there's a there's no longer a question of
how much is this going to cost the company. Now
(11:51):
we know.
S1 (11:52):
Okay, well, it's possibly a bit horrifying that share price
hasn't been affected only because, you know, they've been revealed
to have executed some really horrible behaviour. And it seems
like perhaps there wasn't a cost beyond the fine. But
I guess to wrap up, what about Reputationally? Because of
course you just mentioned the ghost flight scandal from last year.
As you mentioned, it was selling flights to customers for
(12:13):
flights that they knew they were about to cancel. So
is the airline damaged beyond repair?
S3 (12:18):
Well, I mean, one of the tasks of Vanessa Hudson
once she became CEO in 2023. So that's Alan Joyce
stepped down two months early amid all the recriminations and
backlash to to these events.
S1 (12:30):
Horrific PR nightmare that it was horrific.
S3 (12:33):
Yes. I mean, it really was a moment where, you know,
the trust in this brand really cratered. So for Hudson,
her her mandate has been has been to meticulously try
to rebuild this trust. So and that's not just, you know,
outside the company, but within the company. Um, and this
is a company that has a long history of industrial
(12:54):
relations and industrial relations tensions as well. So it's quite
a big, uh, you know, it's a big task. And, uh,
that's what she has set the company towards, and that's
what the company is trying to do slowly, slowly, trying
to build back trust, trying to address concerns about customers,
trying to show that it's a more responsive, trying to, uh,
(13:16):
increase the on time performance, trying to create a better experience.
It's all of these things that she has to sort
of balance and to try to, to try to turn
the corner away from what had been a very, you know,
what had been a very long path by Joyce, who
had been CEO for 15 years. I mean, it was
(13:37):
almost at a certain point the company was starting to
become synonymous with his personality. So she's she's in this
process of trying to rebuild this reputation. You know, it's
quite a mountain to climb, but, you know, it's also
Qantas has always been in a unique position, uh, as
this iconic airline, you know, a very old airline very
(13:59):
well established within the country. A lot of the public
feels it has some sort of ownership of the of
Qantas itself, in a way, because it has this almost,
you know, it has this very close relationship with political
leaders with and with the identity of, of the nation.
S1 (14:15):
Well, you've got to wonder whether this is perhaps one
of the more stubborn companies because, you know, you just mentioned,
of course, the task ahead of the new CEO, Vanessa Hudson.
And I know you must have noticed with great interest
that Justice Michael Lee had some choice words for her
as well, and the fact that she did not enter
the witness box during the court hearings. And he said
that Qantas had claimed, quote, the intention of the new
(14:37):
leadership and accountability quote would be to learn from its
mistake and implement change. But whatever this new leadership and
accountability means in concrete terms, it didn't extend to Miss
Hudson taking the step of entering the witness box. Ouch.
S3 (14:51):
Yeah. I mean, it's again, it's almost like the it's
almost like we're seeing the tension between a robust and
unapologetic PR strategy versus this, this greater expectation, which is
like the sense that the court and the public wants
to see Qantas and wants to see the executives of
(15:13):
Qantas be accountable. And that means actually being there in person.
That means, you know, sweating under the lights in the
witness box or whatever. They want to see that, to
know that, okay, there's a human in the in the
C-suite that's feeling this pressure, that's feeling this pain and
that that was absent. And I do think that that
that helped colour, uh, Justice Lee's thinking about the penalties.
S1 (15:34):
Yeah. It's like he thought, okay, well, we all collectively
deserve this mea culpa from this company. It's quite interesting, really.
I don't know how often you see this sort of dynamic,
I guess, between a company that we all know, you know, companies,
they make money and then, yeah, something of a smackdown,
I think, in the court really well.
S3 (15:51):
And I think with Qantas they sort of, you know, they,
they benefit, you know, the thing that they benefit from,
which is their sort of iconic status, their dominance also
in certain situations becomes the real, you know, the real
millstone around their neck because then everybody has a view,
everybody has an experience, everybody has an expectation. And the
(16:12):
disappointments are something that can be shared very broadly. You know,
they start to become symbolic. I think of other of
other things that are even beyond the airline. And so
that's something that I imagine, you know, if you're, you know,
working at Qantas at that level, it's something that you'd
have to be thinking about.
S1 (16:32):
Oh I bet. Well, we're lucky you're covering this for us.
So thank you so much, Chris, for your time.
S3 (16:37):
Always a pleasure, Sam. Thank you.
S1 (16:49):
Today's episode of The Morning Edition was produced by myself
and Josh towers. Our executive producer is Tammy Mills. Tom
McKendrick is our head of audio. To listen to our
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(17:11):
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I'm Samantha Selinger. Morris. Thanks for listening.