October 31st, 2011
05:13 AM GMT
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(CNN) – Qantas CEO Alan Joyce’s Saturday message was so startling, he had to say it twice:

“We have decided to ground the Qantas domestic and international fleets immediately,” Joyce said. “I repeat, we are grounding the Qantas fleet now.”

But Joyce’s  "shock and awe" strategy earned some respect. “It is a huge and gutsy call. Alan cannot survive a decision like this if it goes wrong,” an unidentified senior aviation industry source told the Financial Times.

But the Qantas union – which has been embroiled in a year-long labor dispute punctuated by rolling walkouts – was caught flat-footed, as was the government of Australian Prime Minister Julia Gillard and, of course, tens of thousands of Qantas passengers worldwide.

"It makes me wonder whether I would book with Qantas again," Isabelle Storer, who was stuck at the airport with her husband after a visit to the United States, told CNN.

It's "a maniacal overreaction," said Richard Woodward, vice president of the Australian and International Pilots' Union. “I think Alan Joyce is destroying the brand of Qantas; he’s holding the passengers for ransom as he blackmails the government of Australia.  Australian Assistant Treasurer Bill Shorten labeled the decision a "high-handed ambush."

"We're conscious the Australian economy has been put at great risk of damage" due to the strike, Shorten said. Labor relations tribunal Fair Work Australia agreed, ordering an end to the labor dispute "to avoid significant damage to the tourism industry."

Some wonder if this was Joyce’s plan all along – to force the government to act on a labor dispute the company claims has cost the company $72.5 million.

Still, the timing of the decision to ground the flight has raised eyebrows: On Friday, the Qantas shareholders voted to approve a 71% pay increase for Joyce even as Qantas management pushed for a restructuring that would eliminate 1,000 staff.

Joyce, a native of Ireland, has been CEO of Qantas since 2008, after a five-year tenure as CEO of Jetstar. Joyce has been pushing a restructuring that would put more focus on expanding its budget airline operations, start a new premium service outside of Australia and cut some long-haul routes.

Maybe Joyce acted out of sheer frustration – he claims to have been the subject of repeated death threats, it was revealed earlier this month.

Whatever the reason, it’s clear Joyce is betting his job on Saturday’s hard-ball move. Only time will tell whether the strategy will pay off, or be a career killer.

soundoff (47 Responses)
  1. Avi

    This must now be a new Irish joke: What does an Irish CEO to do when airline unions strike? Strike them harder and ground them. And ground the airline too along with the paying passengers worldwide.

    The move definitely damaged the Qantas brand. Even Aeroflot or Air China wouldn't do such a thing. I am booking on Malaysian or Singapore henceforth.

    October 31, 2011 at 6:25 am |
  2. jeff

    if airline unions can stop work by striking, i guess it's only fair that the corporation is allowed the same

    October 31, 2011 at 6:37 am |
  3. SueHelen

    EXCUSE ME! A 71 %pay increase! While he cuts 1000 jobs! Isn't this what the Wallstreet protesters are screaming about??? Can somebody please do something about these criminals instead of supporting them????

    October 31, 2011 at 7:07 am |
  4. Mike19092032109

    If an employee doesn't show up for work because he things his salary is too low, then why can't his employer just fire him????

    October 31, 2011 at 7:16 am |
  5. SueHelenIsNotSmart

    A private company can pay their workers as they see fit and it's none of your business. If you don't like the salary they give you, you can quit and try to find a higher paying job. That's how free markets work.

    October 31, 2011 at 7:17 am |
  6. Guest

    Settle problems in the courts, not by striking and hurting the innocent.

    October 31, 2011 at 7:21 am |
  7. Guest

    Settle the problems in court, not by striking and hurting the innocent.

    October 31, 2011 at 7:22 am |
  8. Alberto

    suehelen, what is "criminal" aka illegal about Quantas, a non-governmental corporation, paying its CEO any amount of money they want? could you cite the specific Australian law that breaks?
    I didn't think so you dumb person

    October 31, 2011 at 7:22 am |
  9. Matt

    No, it isn't 'gutsy' for the head of an Australian airline to lay off its Australian aircraft maintenance workers and send all their jobs overseas to cheap labor markets when the company already made a 250 million dollar profit AFTER tax. It is this nauseating level of greed that has brought once proud nations to their knees.

    October 31, 2011 at 7:47 am |
  10. Gary

    Personally, I feel that Alan Joyce's decision was the right move. People need to look at a bigger picture.
    1. Investors run an airline to make a profit and to grow the airline. Not to make a profit and share it to every employee. Qantas earned $200+ million, so what? A single wide-bodied plane already cost $200+ million.
    2. Joyce got a raise because he deserved the raise. For the past couple of months, Qantas planes have been breaking down due to lazy and careless staff. Why should they get a raise? You only get a raise if you deserve one.
    3. If the unions were not complaining all the time about wage increase, there wouldn't be a need to cut 1000 jobs in the first place.
    4. The someone in the article said Alan Joyce was irresponsible. Excuse me? The unions are the one whose on strike all the time and causing inconvenience to passengers. Unions are the one holding passengers as "hostage".
    5. Unions seems to be forgetting that they are getting paid if they do something for the employer, not where you give me a paycheck and I will work for you.
    I liked how Cathay dealt with the 49ers. The 49ers caused trouble, Cathay fired them all.

    October 31, 2011 at 7:53 am |
  11. gr

    I am an aussie expat who lives in the USA – I am home at the moment – and am due to fly back nov 15 – I am NOT amused by this idiots HUGE salary but to pay short haul pilots 350 k which is about what a-380 pilots make and what THEY want is also NOT amusing – oh and I am flying

    October 31, 2011 at 7:57 am |
  12. gr

    qantas this time as I did the previous two times

    October 31, 2011 at 7:58 am |
  13. gr

    and when my husband flew back oct 17 – his singapore to london flight (original) was from sydney to london – and because of our little union friends was delayed SIX hours – he would have missed his delta connected from london to atlanta – at least qantas put him on a flight which made it on time AND kept him on a 380

    October 31, 2011 at 8:00 am |
  14. Sally

    It isn't gutsy, rather idiotic. The outstanding issues should have been settled long ago both Qantas and Unions equally at fault. Mr Joyce should leave by example – a 71% increase to his salary one day before grounding the entire business is irresponsible and certainly tarnishes the image of qantas and gains him no credibility.

    October 31, 2011 at 8:01 am |
  15. Gary

    6. As I mentioned earlier, the list price of a single wide-bodied plane is around $200+ million. To many people, $200+ million sounds a lot, but in the airline industry, it's really nothing much. Think about the constant revamp of inflight products. They can easily cost couple hundred million dollars. Think about the constant need to purchase new aircraft to replace aging aircrafts. They cost billions of dollars. Think about an economic downturn when the survival of the airline is the top priority over everything else. If the airline don't save up as much cash as possible , the airline may not be able to get through bad economic times. That's when they need to start fire people. That's when you go home and tell your your family and children that you got fired.
    Unions, stop whining!

    October 31, 2011 at 8:04 am |
  16. Dee

    Mr. Joyce, a NATURALIZED Australian citizen took the very brave step of halting not one but three unions in their scurrilous activities, when he announced he was grounding the airline. He made this very tough call after it was clear that an extremely talented Board of Directors supported him. The unions had also made clear they would not respond to ANY of the highly reasonable offers put forward to them by Mr. Joyce in the complicated process of negotiation. There was never going to be a good time fo Mr. Joyce to do this. The unions would only have been naughtier as Christmas holidays grew closer. They are on public record as stating this as their intent. They are on public record as stating tey were prepared to drag out a dispute for well over twelve months. It was an impossible situation. Mr. Joyce had very clearly and effectively laid out his plans, supported by The Board to ensure te future viability ofthe airline. The Unions were fighting to maintain soe work practices that are no longer even required. His is largely due to technological advances. Workers in Australia are paid very handsomely. Mr. Joyce took a voluntary pay cut for two previous years. His current salary is not even considered high by CEO standards. So, yes, unions have been instrumental and valuable over the years in ensuring workers rights'. This is a good thing. This was an impossible situation with many convolutions not covered in this interesting, yet short, article. There is no need for emotive language from readers in response to a situation where an executive is working at fiscal responsibility to ensure job RETENTION. Especially as USA is currently suffering from its own self created financial woes. This is a highly complicated story, ill served by poorly informed, emotive, knee jerk reactions. Havi g said that, it must have been hideous to be caught up as a passenger on that particular day. Mr. Joyce's strategy has been successful under the relevant and appropriate laws required to halt the nonsense initiated by three powerful unions with one goal....bring down the very airline that pays them extremely high wages.

    October 31, 2011 at 8:54 am |
  17. peter warren

    If the unions strike, it is "downtrodden worker's only way to combat viscous management". If management strikes it is "maniacal ambush" "destroying the brand !" "destroying the company !!!". Seems to me that what is sauce for the goose is sauce for the gander. Pity a few more management people do not have the same courage and prefer to let unions destroy industries (UK car industry for example) and force all the jobs out of the country and into China. Maybe these unions are paid off by China? The result is the same as if they were. Anyway, cheers for the strikers, following in the footsteps of the BA unions and go go go go on the destructive rampage. yea! Destroy an Industry! Go for it.

    October 31, 2011 at 9:35 am |
  18. Stephen farrelly

    Fair play to Joyce – he needed to meet them head-on, the unions would love to finish off the airlines – it's the same with BA/Willie Wlash – he needed to stand up to them or capitulate and therefore put the future of Quantas in doubt.

    October 31, 2011 at 9:54 am |
  19. derek

    I know pilots that make less than flight attendants. These guys deserve a bit more respect as they actually run the company! The whole system is backwards...just pay decent wages, that's all anyone wants...they aren't commanding millions for each pilot! I wonder if the Qantas CEO learned his lack of customer focus from his Irish brothers at Ryan Air! How much do you want to bet grounding all flights will have such a negative impact on Qantas' reputation that it will have amount to more than what the pilots were demanding? I'm just baffled at the lack of customer service...what a goon.

    October 31, 2011 at 10:00 am |
  20. Stroppy

    All I know is next time.... I fly Virgin

    October 31, 2011 at 10:20 am |
  21. Dee

    QANTAS pilots are reputed to earn a minimum of $500,000/year. This is about the same in US and AU dollars. This is irregardless of whether the flights are domestic or international. So, Derek, you might not have complete information to make the assertion you just did, in relation to Australian current working conditions. QANTAS pilots are very highly respected indeed. I always hope I have a QANTAS trained pilot flying any plane I am on. The customer service is pretty good also. Have you flown QANTAS? The issue here is that three unions, one in particular, have declared they have no intention of stopping crippling strike action after ten months of negotiations, and handsome offers from management. Further, the unionS state they intend to continue their behaviour for at east one more year. This is simply untenable. The CEO is forced to take this action in order to get the case heard before a legal arbitration board. The CEO has stayed calm and acted ethically in the face of extreme provocation. It is terrible that passengers have been caught up in this and suffered. Really suffered. It is terrible this iconic brand is being tarnished by people who work for it. They are happy to take. That is all. Take. Not contribute.

    October 31, 2011 at 10:27 am |
  22. André

    Oh no! Only unions (parasites) may strike, and destroy companies. Those who established them and made them work may not. You see, anyone who works for a company is by definition too dumb, too lazy or just too useless to show an entrepreneurial spirit.

    October 31, 2011 at 10:32 am |
  23. Susan

    Well said Dee ... I couldn't have said it any better ... the bottom line is, which is better having a major iconic business survive and maintain as many employees as it possibly can & make a profit – or let the unions destroy it completely. Well done to Mr. Joyce for hopefully saving Qantas. Oh and personally, I'd fly Qantas any day anywhere, as far as I'm concerned they've improved their already good reputation – a truly great brand.

    October 31, 2011 at 11:49 am |
  24. Nick

    Why can't people spell Qantas?

    October 31, 2011 at 12:12 pm |
  25. Kat

    Stranding a small city's worth of people was totally irresponsible. Maximizing profits at the expense of jobs is plain wrong, the act of a psychopath - destroying lives for money. Shareholders need to look beyond the bottom line at the evil that is done in their names.

    October 31, 2011 at 12:30 pm |
  26. brooke

    @Dee, I hate to be one of those people, but for all your choice words like "untenable" and your well crafted arguement, you use "irregardless" –it is not a word. It detracts from your entire arguement, and you sound like a smart person otherwise. Nice points you mentioned in your commentary, I thought. Sorry to be the one who "calls out" today, I'm not a grammar nerd, by any means, but I can't stand the use of words which do not exist. I honestly thought you might just want to know.

    October 31, 2011 at 1:14 pm |
  27. Dee

    The shareholders are not at all happy with the behaviour of union members employed by a private company, Kat. Unfortunately,in order to force this matter fore a government body to stop the indefinite nonsense, drastic action had to betaken. Otherwise thereal possibility ofthe airline going out of business existed. Therefore, The CEO, with supprt ofThe Board of Management took this incredibly brave step. It is realy sad thatt affected so many people so very badly.however, if it had happeed over Christmas,the long Summer break in Australia,then maybe the collateral damage to passengers coud have een worse. Potentially affecting more people. This was and is a very complicated legal situation.

    October 31, 2011 at 1:14 pm |
  28. Dee

    Brooke, you are correct. The word, Irregardless, is regarded as a controversial choice of word. It is considered by many, but not all, to be a word. So you are partly correct. I do stand corrected, and apologise. It seemed to flow nicely with the iambic pentameter I had selected. My most recent post contains spelling errors. These are a resut of not wearing correct glasses after recent eye surgery. If you have a thought, then there is no need to mention it is honest. For that is the assumption behind all thoughts- that they are honest. It makes for pleasurable dialogue and interaction. There are numerous sides to this QANTAS story. The Australian flight situation and experience is quite different to the American one. Without having the differences explained, I felt that some interesting and understandable assumptions made for an incorrect assessment of a changing paradigm in trade union behaviors.

    October 31, 2011 at 1:26 pm |
  29. Graeme

    And why didn't Prime Minister Julia Gillard talk to Qantas ceo, Alsn Joyce that Saturday afternoon ?? the most hopeless PM this contry has ever had.

    October 31, 2011 at 1:47 pm |
  30. Peter

    What a gutsy move – the CEO is a star who ended a year-long mess in a weekend. Well done.

    October 31, 2011 at 2:12 pm |
  31. Anne

    Friend of mine was scheduled for surgery. She had to drive 17 hours to get to the hospital because her flight was canceled. The move, as you term it, was childish and destructive. It might have taken guts to perform, but that doesn't mean it was the right thing to do.

    October 31, 2011 at 2:29 pm |
  32. Carl LaFong

    Koala bears all over Australia were heard to mutter "I hate Qantas."

    October 31, 2011 at 2:55 pm |
  33. Mike S

    Joyce AND the Qantas board who approved the shutdown NEED TO GO. Some call his action brave..in reality it was foolhardy, stupid, and self serving...showing total disregard for customers, employees, the airlines good name, as well as the negotiation process which is the basis for a good outcome of any industrial disagreement. The whole issue of expansion into asia for cheaper labor and other costs at the expense of Australian (or american) jobs needs to be stopped and companies penalized that continue or commence the practice. We as customers have a right to expect that a Qantas aircraft will be flown by a Qantas pilot with appropriate training as opposed to a cheaper/poorly trained alternative..HOW MUCH IS YOUR LIFE WORTH. I will not fly this airline again until Joyce and company are removed and their plans to introduce sub standard alternatives are shut down.

    October 31, 2011 at 2:59 pm |
  34. Iwouldliketoknow

    Is there by chance a group of lawers anywhere around the globe who are organising a joint action in tort against Mr. Joyce personally for the losses which he caused, and which may not have been completely compensated by Qantas or insurance?

    October 31, 2011 at 3:36 pm |
  35. Dee

    The kangaroos probably were also, Carl. Smile. Yeah, some dreadful stories coming out about people making horrific trips for medical care, cancer medications not flown in timely fashion......just awful the cost to passengers. Most unfair. All because three unions after ten months and two hundred + ( excess of 200) discussions with management refused to accept any f the very generous offers made to them. This is a very typical way that unions in Australia work. Presumably they work similarly in other countries. They would give notice of strike action. The airline would go into contingency plans for the planned strie, then the unions woud typically call the strike off maybe an hour or so before their threatened action. So that is not exactly fair. It is the unions who have been very, very, very naughty here. I am not aware of anybody in Australia ever being brave enough to stand up to these powerful organizations, under existing legislation, and say enough is enough. Ground the airline. And, yes, most definitely the koala and the kookaburras and the kangaroos were right to be cranky. They were the the ones being stranded all over the world. However, this airline actually was being told by these badly behaved unions that they would NEVER settle; that they would continue this appalling behaviour for at least another year. So...when the privately owned airline is run into the ground, out of money because no ody is confident enough to book flights on it....what is going to hapen? Who is going to pay the highly paid, and they are indeed highly paid, recalcitrant workers then? There was ever going to be a good tie for any CEO to take this extraordinary step. I amazed he did it. From a technical point, I applaud him. From a human pointI commiserate with those who suffered through unreasonable union greed. It is now the unions making the loudest noise about how unfair everything is......yawn. Yet unions have a good role also. They have ensured good working conditions. So, time for common sense and decency to be displayed by the UNIONS. Management have been patient and generous. I have followed this dispute very closely. I know nobody who works there.i own no shares. I am somebody who likes reading newspapers and really appreciates having a skilled QANTAS pilot flying whatever plane I am on.

    October 31, 2011 at 9:17 pm |
  36. Hugh

    It seems that we are discovering that there's an exception Irish charm: run an airline and God help anyone who crosses you. Is it possible that he and O'Leary have the same, unknown father? The main point here is that he decided to cause misery worldwide just to prove he has cojones. Instead he's just proven he's a bully. If he had give just 48 hours notice peoiple could have all come home and he could still have his hissy fit and lock out the workers. I know nothing of the dispute or who is in the right or wrong, but I know a bully when I see one.

    October 31, 2011 at 9:37 pm |
  37. OldCactus

    Let's see now, Qantas pulled a union stunt on the union and all of a sudden it is criminal. I suppose it is, because I always considered the stunts the union pulls like one day strikes and even longer strikes, sudden walkouts and other tricks to be criminal also. Union thugs are a bunch of cry babies, they can dish it out but cry crocodile tears when it is turned on them. I certainly hope the Aussies are smart enough to see this for what it is. Americans are no longer smart enough I am sad to say.

    November 1, 2011 at 2:42 am |
  38. Andrew Sydney

    Mr Joyce did the right thing. The pay and employment conditions in Australia are among the best in the world. If employees don't like their pay and work conditioons, i suggest you look for another job or get an education if you want to move up.

    November 1, 2011 at 8:18 am |
  39. brad

    That CEO is a hero. Too bad there aren't more like him. Unions are the scourge of every civilized working man's country. Screw those thieving, violent, modern day shake down artists, that call themselves UNIONS.

    November 1, 2011 at 9:21 am |
  40. spike91

    The strong arm tactics of Qantas to break the union should be a cautionary tale for New Zealand as it consider selling of the national airlines (Air New Zealand) to private interests. A country dependent upon air travel for business is at the mercy of the demands of that business and the entire nation can obviously be held hostage to their demands at the expense of the benefits to the society for a strong and just labor relations. Corporations, with their accounts full of cash, are feeling like they can flex their power. We are all in for a rough time I'm afraid. The powerful have no "reason" to come to their senses as it all seems to be working fine from their perspective, and as they will only respond to a "reasoned debate" in terms of power and force, terms that they can understand it seems, then we are all must await the eventual class conflict.

    The economy is a social abstraction in the service of the betterment of society, rather than the other way round. We get to determine the rules and constraints as part of the political debate in a democratic process.

    November 2, 2011 at 1:12 am |
  41. etaNN

    Employers have a duty to society to pay their workers a fair wage as higher wages benefit everyone. taking such a large pay raise and cutting jobs is bad for A free market system. if the wealthy do not get with the program soon im afraid democracy is doomed and the same CEO's will find them selves begging for their live on top of Galois. No corporation no matter how strong can subvert the will of the people and not be punished.

    November 2, 2011 at 3:51 am |
  42. CGiles

    Whilst employers have a duty to society, reality lives and right now our businesses are still struggling with global financial challenges to be able to stay afloat; with costs rising and less money being spent.
    It is a shame that unions have not grown up over the years – their tactics still seem stuck in the 1960's and frankly, at least they have jobs to worry about!
    It is a pity that a reputable business has been forced to take such drastic action and it is obvious to me that this was a calculated last resort by Qantas, who had offered some very reasonable terms to the unions. Even if I had been left stranded at an airport due to their action, I would still stand and applaud their decision.
    We need to realise there are people out there who would be very grateful for a job working with Qantas under the terms offered and if it doesn't suit current employees, how much pressure should those employees be allowed to use to hijack the survival of key Australian business?

    November 2, 2011 at 12:33 pm |
  43. Bonny

    He absolutely did the right thing – it's about time someone stood up the lazy union worker – well done and we few hope other CEOs follow this brave guys lead. Few will back him because few are lucky enough to have the ability to run such organizations – but the few will know he did the right thing – and poor Labor poli's are weeping and bitter as they know it's another nail in their union coffin. Life is changing for workers in many ways the unions can't even grasp yet

    November 6, 2011 at 6:42 am |
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