Qantas Airways' chief executive Alan Joyce has had his total pay packet grow by nearly 300 per cent last year to almost A$12 million (€8 million) on the back of a major turnround in the financial performance of the airline.
Qantas has just posted its best profit result in seven years on the back of one of the fastest turnarounds in Australian corporate history.
Back in profit
The Australian flagship carrier also said it would make its first cash payout to shareholders in six years after an aggressive cost-cutting programme and tailwinds from cheaper fuel costs led the company back into the black. “If it wasn’t for our transformation programme, Qantas would not be announcing a profit today, nor would we be announcing a return to shareholderes, nor would we be announcing the acquisition of the 787s,” Mr Joyce told reporters.
Pre-tax profit of A$975 million for the year to end-June was slightly under analyst forecasts of A$982 million. Still, it was a sizeable and swift recovery from the A$646 million underlying loss the Flying Kangaroo reported a year ago, and the company’s shares leapt 3.7 per cent in intraday trade before losing their gains along with the broader market.
According to the Financial Times, Mr Joyce's remuneration package included base pay of A$2 million; a cash bonus worth A$1.9 million; the vesting of A$2.5 million shares under a long-term investment plan; a deferred award of A$952,000; and other benefits worth A$112,000. This was bolstered by long-term incentive share price growth worth A$4.5 million. In 2014 Mr Joyce received a total package worth A$4m.
Turnaround plan
Joyce, who previously worked with Aer Lingus before moving to Australia in 1996, claimed credit for the strategy to cut costs including 5,000 jobs, trim capacity, raise fares and overhaul the airline's frequent flyer programme. Of A$894 million in cost reductions in fiscal 2015, lower fuel prices contributed A$597 million. Fuel expenses were capped at 2015 levels in the current financial year because of Qantas' hedging policy, Mr Joyce said.
Qantas had postponed plans to refresh its ageing fleet of 11 Boeing 747s used on long-haul flights with the 787-9s when it was in financial difficulty. The airline has another 12 options for 787-9s from 2017 and a further 30 purchase rights.
Qantas shares hit their highest intraday level since 2008 before dipping 1 per cent, outperforming the broader market decline of 1.4 per cent. The shares have soared 200 per cent in the past year, the fourth-best performing airline stock among 47 large and midcap airline companies, according to Thomson Reuters data. “All of the things that (Joyce) has done should have been done quite a while ago,” Morningstar analyst Ross MacMillan said.
Qantas didn’t declare a dividend but said it planned to pay shareholders 23 cents per share, tax-free. It last paid a dividend in 2009.
- Reuters/Bloomberg