Air Transport World

The quiet roar

Qantas's caution has helped it remain firmly profitable in the face of Asia's collapse

SYDNEY--For an airline under siege on the political, commercial and economic fronts, Qantas Airways is holding up remarkably well.

Australia's self-designated "global airline" stands as an anomaly in the Asia/Pacific region. As virtually all of its regional competitors, Air New Zealand and Ansett included, suffer financial hidings, Qantas has at least maintained its profit in the last fiscal year. That in itself is no mean feat-just ask the likes of Indonesia's Garuda, Malaysia Airlines, Asiana and Philippine Airlines, each facing its own Alamo as Asia's economic and market credibility continues to unravel (see related article, page 30).

While many Asian operators have been living on a high-growth diet fed by seemingly bottomless optimism, Qantas has pursued a much more cautious path of incremental expansion. At the same time, it has reassembled and cranked up its dominant share of the yield-rich domestic market at Ansett's expense. The result of the undistilled conservatism of its management and board has been a more resilient Qantas, capable of withstanding the battering that floored so many of its rivals in recent months. In many ways, it has been the tortoise to Asia's hares. Qantas's stoicism inevitably has attracted some criticism, particularly in the share market, but its healthy balance sheet is an effective answer to those who would have preferred more aggression.

"We cannot afford to be arrogant but I think we're in pretty good shape to withstand the competition," Managing Director James Strong, architect of the reconstruction, told ATW. "There are still many areas of the airline that could be improved in an environment where the pressure of the need for continuing change and positioning for the next era is quite urgent. But we believe we have improved the financial performance of the company substantially in the last two years.

"There has been an enormous amount of progress in terms of changing the whole way in which Qantas operates."

Since the public float three years ago, Qantas has been turned into a commercially minded enterprise with a fixation on raising shareholder value. The pain and deep employee discontent fostered by the early-1990s merger with domestic carrier Australian Airlines have largely dissipated.

But competition never has been harder for Qantas, nor has turning a profit. Despite that, Strong, coming up to his fifth year at the airline in October, has retained his cool demeanor and sense of purpose. …

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