28 November 2008

Outgoing Qantas chiefÃ¢â¬â¢s pay under fire ahead of AGM

According to Business Spectator, outgoing Qantas Airways boss Geoff Dixon could be flying into a storm of criticism over his pay as he gets ready to pass the helm on to new chief Alan Joyce.

Qantas, which is bracing for a 64 per cent drop in annual profits this financial year, has reportedly maintained an Ã¢â¬ÅâœexcessiveÃ¢â¬~ pay structure for Mr Dixon and his senior executive team despite tougher conditions.

With the airlineÃ¢â¬â¢s annual general meeting scheduled for today, governance adviser RiskMetrics has advised some Qantas's largest shareholders to vote against the executive pay deal, reports The Sydney Morning Herald.

According to RiskMetrics, Mr DixonÃ¢â¬â¢s fixed salary of $2.3 million and his cash-based pay of $5.3 million was much greater than that of his peers, the paper said.

"While Dixon is in cash terms the highest-paid aviation executive in the world, Qantas revenues Ã¢â¬~¦ are lower than six of the 11 other airlines considered," RiskMetrics' report said.

Meanwhile, the man set to replace Mr Dixon, former Jetstar boss Joyce, is mulling a significant overhaul to boost the airlineÃ¢â¬â¢s flagging fortunes.

According to The Australian Financial Review, Mr Joyce is planning a comprehensive strategy, to be finished before the end of this year, to tackle the impending profit slump.

Mr Joyce is aiming a $400 million savings in capital expenditure savings before June 30, 2009, the paper said.

There is also speculation that the airline may be pursuing a merger in Europe and also has designs on a play in Asia.

Mr Joyce maintains any deal will be a Ã¢â¬Åâœmerger of equalsÃ¢â¬~ and a step into making Qantas a new Ã¢â¬Åâœworld airlineÃ¢â¬~, the AFR said.

The airline has also announced cuts to its domestic fuel surcharge by up to $5 following a fall in global oil and jet fuel prices.

The new surcharges to be applied to Qantas and QantasLink jet services will be $21, down from $26 and for QantasLink turboprop services it will $21, down from $26.

Executive general manager John Borghetti said the domestic cuts follow a previous reduction in international surcharges.

"In early October, we reduced international surcharges by as much as $40 per return trip, and lowered domestic fares by approximately 2-3 per cent,Ã¢â¬~ he said.

Ã¢â¬ÅâœOil prices have come down further since then, however they remain volatile."

On Tuesday, the airline forecast it profit before tax will be around $500 million in fiscal 2009, and that it will be cutting capacity further as a result of slower demand.

The revised forecast is compared with an average forecast from analysts of $749 million, according to Reuters Estimates. The group in August had forecast a 47 per cent fall in pre-tax profit for this year.

The capacity reductions would be equivalent to grounding 10 aircraft which chief executive Geoff Dixon said would create greater flexibility for the airline when market conditions improve.

Qantas' annual general meeting is scheduled to be held in Brisbane at 1130 AEDT today.

A Report by The Mole