Qantas’ Margaret Jackson speaks with ABC Lateline’s Ali Moore

This inteview has been reproduced from the ABC and is provided by TravelMole as an interview of singificant industry interest.

ALI MOORE: Qantas chairman, Margaret Jackson, joined me in the studio earlier this evening.

Margaret Jackson, welcome to Lateline Business. Just two months ago you expected to match last year’s profit in the current year. Now you expect to beat it. How much has changed in the past few months?

MARGARET JACKSON: Well, what we’ve seen is what’s happening in terms of the bookings, it’s been coming through very strong and our cost recovery program has come in through stronger than we expected two months ago. So today at the AGM what we said was that we now do expect to beat last year’s results this year.

ALI MOORE: So how much better can you do? Are we talking double digit profit growth?

MARGARET JACKSON: I’m not going to go any further than say that we are going to beat last year, because that’s already quite a strong comment, given what we said two months ago and also given the situation with fuel.

ALI MOORE: You’ve talked a lot about the airbus delay as well and that’s been much in the press and the media. You’re going to announce contingency plans over the coming week. What can you do to make up for not getting that aircraft when you thought you would?

MARGARET JACKSON: Well, the first thing is that the delay of the A380 is about two years from where we expected. And if you reflect back to when the 747 was delivered, that was also about two years late. The good news for Qantas is that our competitors that have ordered the A380 aren’t getting their A380s either.

ALI MOORE: How much compensation will you get from airbus this time round, something like half what you got last time that was the $104 million?

MARGARET JACKSON: No, it’s not of that magnitude. So 104 million is what we got last year. What we’ve been negotiating with airbus is additional compensation but it’s much more modest.

ALI MOORE: So half, like 50 million?

MARGARET JACKSON: Less.

ALI MOORE: Less than that. Substantially less than that?

MARGARET JACKSON: Yes.

ALI MOORE: Enough though to compensate you?

MARGARET JACKSON: What we’re looking at is a package with airbus in terms of other aircraft that we may need within the network. So it’s not necessarily just the compensation for the delay.

ALI MOORE: Could be cut price on future aircraft.

MARGARET JACKSON: Well, it could be things like positions in the production, other aircraft, prices of the aircraft as well.

ALI MOORE: You’ve also announced today that you’re outsourcing 340 jobs in the IT sector to India. Is that a thin edge of the wedge?

MARGARET JACKSON: I don’t think so. It’s that I think there’s been a lot of discussion by our unions I think, and some of the sections within the wider community. The reality is we’re part of the world and what we at Qantas have to do is you have to look at where you can get the best skills. And these companies that we’re outsourcing to are very large companies. Their market cap is 25 billion. I mean, they’re massive companies that are providing the best service in the world. So it’s a skill question.

ALI MOORE: But are there other skill sets within Qantas that could potentially go offshore as well?

MARGARET JACKSON: Well, we never say no and I think what we at Qantas are committed to is the vast majority of people that we do employ in Australia and we still have 37,000 people employed in Australia. 93 per cent of all of our staff are employed in Australia. That’s higher than any other airline in terms of their domestic market.

ALI MOORE: Well, will it be 93 per cent in say five years’ time?

MARGARET JACKSON: I can’t tell you. But what I can tell you is that for the moment we’re very committed to creating jobs in Australia, but also to providing what is the best service and what is the best source of talent in the global world.

ALI MOORE: You’re currently a two-brand strategy. With Jetstar’s cost basis something like 40 per cent below Qantas’s, can you see a day where you’re one brand and the one brand isn’t necessarily Qantas?

MARGARET JACKSON: No, I can’t, because what we have with Jetstar is the low cost operation, which is 30 to 40 per cent lower. But the product is aimed at a very different sector of the market than Qantas. Qantas, we have our full three class international service.

ALI MOORE: So even with the different cost base there will always be two brands.

MARGARET JACKSON: I can’t imagine a scenario in the future where there isn’t a Qantas brand with its full service going to the major hubs of the world.

ALI MOORE: Can you see any logic to spinning Jetstar off?

MARGARET JACKSON: Well, you can never say never, but at the moment I can’t see any logic to doing that.

ALI MOORE: But Jetstar Airlines like Jetstar tend to trade on better multiples, don’t they, the more traditional carriers?

MARGARET JACKSON: They do, but one of the things you can do is increase the amount of information you give to the market and hope that the market factors in the underlying value that Jetstar has within the Qantas portfolio.

ALI MOORE: Are you saying basically there is no interest from the Board in spinning Jetstar off?

MARGARET JACKSON: Not at this point, no.

ALI MOORE: So why hasn’t your managing director ruled it out?

MARGARET JACKSON: Well, it’s always an option that he can look at, but at this point we can’t see the value in it.

ALI MOORE: Margaret Jackson, thank you very much for coming into the studio.

MARGARET JACKSON: Thank you, Ali.

Reproduced from the ABC