26 November 2008

QantasÃ¢â¬â¢s new chief looks to be facing bumpy ride

A report in LondonÃ¢â¬â¢s Financial Times says that Geoff DixonÃ¢â¬â¢s parting shot before stepping down as Qantas chief on Friday was to cut aircraft capacity further and warn that this yearÃ¢â¬â¢s profits may be two-thirds lower.

But, as the worldÃ¢â¬â¢s airlines buckle under increasingly tough conditions Ã¢â¬' business and upscale leisure travel have fallen precipitously Ã¢â¬' the move looked prudent.

Mr Dixon may have blotted his copy book a little by being involved in the failed A$11bn (US$7.1bn) buy-out of Qantas but he has earned a reputation for being a fearless, and at times deeply unpopular, cost-cutter.

By making Qantas take its medicine often and early, he hands the airline over to Alan Joyce in remarkably good shape.

Mr Joyce was very much on message on Tuesday when he said that tough action on cost cutting was now part of QantasÃ¢â¬â¢s DNA.

He even appeared to deviate from the script a little by declaring that QantasÃ¢â¬â¢s international operations Ã¢â¬' currently the problem business Ã¢â¬' would scale back activities by 10 per cent in the first six months of 2009.

Unlike many carriers around the world, Mr Joyce does not inherit a basket case.

On a more positive front, fuel prices have fallen and a weaker Australian dollar is reviving some travel markets, notably Japan. But given the state of the world financial markets and economic outlook, Mr Joyce is heading for a bumpy maiden flight.

A Report by The Mole