Dixon’s view on life after Qantas and what he has achieved………..

In an interview in The Australian after eight years as CEO of Qantas, Geoff Dixon is confident he is leaving a stronger, more viable airline and it will be one better able to negotiate an increasingly difficult environment on its own terms.

He sees consolidation, cost control, looking after shareholders and maintaining the airline’s strong Australian brand as the key challenges.

Dixon, 68, who steps down next month after 14 years with the airline, says industry consolidation is inevitable — and that Qantas will be part of it.

There is a new world order in the aviation industry, he says. The days of cheap fuel are never coming back. So while the global economy is weakening and competition with low-cost carriers is cut-throat, big airlines are having to invest billions of dollars in new fuel-efficient aircraft, such as the Airbus A380s now arriving at Qantas.

“There are almost 300 airlines in the world and there are only three or four major car companies,” Dixon says. “Qantas is a very strong airline. It is well placed in this industry, which is very capital-intensive. (But) you must consolidate. You must get scale. It could be regional, it could be global.

“(Qantas) is pretty much an iconic Australian company. But the one way to make sure it keeps on being an iconic Australian company is to … have some scale.”

Dixon says any consolidation moves will require a good cultural fit between the players involved.

“You will need proper cultural fits — people who can seriously work together,” he says. “But I do believe it’s going to happen and I think Qantas will be part of it.”

Previous efforts to link up with Air New Zealand and rumours of a tie-up with Singapore Airlines came to nothing. British Airways sold out of its 25 per cent stake in frustration over foreign ownership restrictions.  But Dixon believes that the time is fast approaching for some bold action. Qantas is already in an alliance with Cathay Pacific, British Airways, American Airlines, Japan Air Lines, Spain’s Iberia, Finnair, Hungary’s Malev, Royal Jordanian and Chile’s LAN.  But the benefits of such alliances are regarded as having been pushed to their practical limits.

Consolidation in more formal ways, Dixon says, is already starting to happen.  British Airways has signed a “joint business agreement” with American Airlines and Iberia covering flights between North America and Europe. KLM and Air France have merged while five airlines, including Lufthansa and KLM-Air France, have expressed an interest in buying into Austrian Airlines.

In Asia, Cathay Pacific has taken over Dragon Air and bought an 18 per cent stake in Air China while rival China Eastern has been looking for international investors.

Dixon’s successor, Alan Joyce, agrees on the need for consolidation in the industry.  “There are too many players, which leads to irrational competition in some cases,” he says. “The industry is very fragmented.”  “Richard Branson once said the quickest way to become a millionaire is to start out as a billionaire and invest in the aviation industry.”

One of the problems facing Qantas management, Dixon says, is that sections of the staff and the public think the airline is still government-owned.

He believes some staff harbour a “sense of entitlement” about the good old days and some among the Australian public still think of the airline as a public utility that doesn’t need to make a profit.

“We operate day to day as a full privatised public company,” Dixon says. “No one is going to come and bail us out.

“I am not saying that Singapore Airlines or Cathay or Emirates are not outstanding airlines in their own right.”  “But whatever people say (the fact is that) being government-owned gives them a certainty — a triple-A backing — which makes quite a bit of difference.”

For Qantas, consolidation could mean linking up with one or more major international airlines, or buying into smaller airlines in Asia. It has done this with a 20 per cent stake in Jetstar Pacific (Vietnam) and its 42 per cent stake in Jetstar Asia with Singapore’s Temasek.

Both Dixon and Joyce are keeping their own counsel about exactly how they see consolidation playing out. Whatever happens, Dixon says Qantas will always be seen as an Australian airline.

“One thing that will always be sacrosanct is that Australia will be its principal place of business and where by far most of its people will work.”  “It will always keep its Australianness.”  “It will always have the kangaroo.”

Dixon, who came up through the marketing side of the airline, says the Spirit of Australia face of Qantas will always be a part of its brand. But its international face might focus more on the fact that it is a respected long-standing airline.

“We have just started advertising overseas under the tag of ‘the world’s most experienced airline’,” he says. “I think that tagline could carry Qantas a long way overseas.”

Dixon says that controlling costs is the name of the game for all companies in the decade ahead. Tough decisions like the lay-offs announced in July give management the chance to survive the tough times and be flexible enough to take advantage of new opportunities.

“We really are focused on the bottom line and I just don’t believe an airline can be any other way.”  “We will only get shareholder support if we are successful.” “And if we are successful, we will have more jobs and our people will be better off.”

Dixon will remain a consultant to the airline until the end of March.

Dixon sees Joyce’s appointment as allowing Qantas to make the leap to a new generation of management.  “A real plus for this (Joyce’s appointment) is that it’s a generational change and it’s a serious one,” he says. “It’s no bad thing.

“There have been a few roadblocks in some of the areas where there had been stable management at executive level.”  “A lot of people will be quite pleased to see it opening up.”  “I have no fears for the company or its ability to take a chief executive change in its stride.”

During his time at the top, Dixon was seen as the tough guy prepared to make the difficult decisions, including laying off staff, to keep the airline profitable.

In July, Dixon held a press conference announcing that the Qantas group would be slashing 1,500 jobs around the world and cancelling plans to hire another 1,200 staff.  That was in response to a $2 billion increase in its fuel bill and a weaker world economy.

Wearing his usual open-necked pale striped shirt, Dixon sat alone at a table which 18 months before had been the setting for the almost rapturous hug from then chairman Margaret Jackson as they announced the Qantas board’s decision to back an $11 billion private equity bid for the airline by Airline Partners Australia.

Months later, that deal fell through spectacularly at the last minute when one major US fund manager failed to accept the bid, leaving Jackson to face criticism that she had been too eager to accept the offer. Dixon and the recently departed chief financial officer Peter Gregg bore some residual criticism for standing to benefit personally from the big financial packages that would have come with the takeover.

Dixon, who said at the time he would be donating some of his personal financial gain to charity, would clearly have loved the chance to run Qantas as a private company out of the public spotlight.

“I will go to my grave saying that no one did anything wrong,” he says. “We got a good offer — the best price we had ever seen.”  “We put it to shareholders and it was voted down.”  “I will defend the whole process.”

(The Qantas share price, at $2.65, is less than half the offer price of $5.45 a share.)

But once the bid started to fall apart, Dixon moved quickly to regain the momentum and pushed ahead with new plans including the proposed float of its frequent flyer program (now temporarily delayed by the global financial turmoil).

“One of the great strengths of this company — both the board and the management — was that it was knocked down one day but no one sat around crying about it,” he says. “We got on and did what we had to do.”

Dixon points out that if the Qantas board had rejected the $5.45-a-share offer when it was made in December 2006 it might have been open to criticism now — and even legal action — from disgruntled shareholders who missed out on the chance to cash in near the top of the market.

At the July press conference announcing the job cuts Dixon momentarily leaned his head on his hand.  The photographers snapped away at the picture of a careworn CEO delivering bad news.  Dixon, the marketing expert who started his career as a journalist on Wagga Wagga’s Daily Advertiser, kept the pose long enough for all to get the picture.

Yet the next month Dixon announced a record profit — a 46 per cent increase in pre-tax earnings to $1.4 billion for the year to June 30 — and there was a smile for the cameras.

Qantas now has orders for about $36 billion in fuel-efficient aircraft including the A380s and the Boeing Dreamliner 787s due next year.

Dixon, who has been seen as one of the hardmen of corporate Australia, admits that there may be a different attitude at the top of Qantas with the more affable Joyce in charge. “Alan brings a different set of skills,” he says.

Will Joyce’s administration mean a change in the culture at Qantas?

“I suspect it won’t be quite as aggressive.”

“But I would hope it won’t need to be quite as aggressive.”  “We had a few issues we needed to fight for.”

Dixon leaves Qantas fiercely proud that he has steered it through some tough times, doubling its size and leaving it in good financial shape.

He says Qantas was once seen as an airline that was well run operationally but second-tier when it came to marketing and customer service.

“Now we are seen as absolutely one of top airlines in the world,” he says. “It’s nice to be able to leave the company in a situation where it is very profitable and is in a strong position.”  “Given the carnage across this industry, I suppose it’s a good as you can expect.”

As for the future, he will remain on the boards of James Packer’s listed companies Consolidated Media and Crown Ltd, but he says he doesn’t expect to be deluged with offers to join other boards.

“I assure you I’m not going to fall in a heap,” he says. “I’m going to enjoy myself — go horse-riding, read books, do all the things I haven’t been able to do.”  “I’m looking forward to doing it.”  “You make your own opportunities.”  “I always have.”

A Report by The Mole from The Australian