Alan Joyce at the Qantas A380 roll-out

Qantas CEO designate Alan Joyce made his international press debut at last week’s roll-out in Toulouse of its first Airbus A380. Our man there Niall O’Keefe, the European editor of Flight, spent some time with Alan. As fellow Dubliners they got on like a house on fire.

 

Alan Joyce in foyer (2006).jpg

On one of the major topics of the day, Joyce says he expects Qantas to be an active player in airline industry consolidation. The airline would make an “attractive partner”, he says, and hence it would have flexibility in its merger position.

 

It has favourable fuel hedges in place and has ridden the wave of the commodities boom (resource companies make up a sizeable chunk of its corporate accounts). Joyce notes that the airlines hardest hit by the global slowdown are those based at financial centres, such as Hong Kong – the Australian economy, by contrast, remains strong. However, he recognises his airline’s weaknesses an “end-of-line carrier” with a domestic market of 21 million.

 

Hence it is taking a proactive approach to consolidation. It’s not that it needs to engage in a merger today; however, it would rather do so from a position of strength than wait a few years into an unknowable future, with the future of oil prices particularly hard to predict.

 

Pressed on what form consolidation involving Qantas might take – acquisition of smaller, distressed airlines or merger with another major player – Joyce insists that Qantas is keeping its options open. Talks with various players were ongoing, in an environment that was ever-changing.

 

Nothing could be predicted with certainty. Qantas talked to Air New Zealand for 18 months; it went nowhere. Two-year talks with Singapore likewise yielded nothing.

 

Joyce is more certain in predicting that there will be failures among start-up airlines if fuel prices remain high. With some approval he quoted Michael O’Leary’s vision of “crappy airlines” disappearing, adding: “I can see it happening.”

 

Yet he seems frustrated by the continuing existence of Alitalia, loss-making for some 15 years. “That happens in no other industry,” he comments. “In any other industry a failed business would be a failed business.” Sagas such as that involving Alitalia make it difficult for “economically sound” airlines.

 

BA chief Willie Walsh expects 30 airlines to go bust this year. That mightn’t be a bad forecast, Joyce reckons.

 

For our full coverage of the Qantas A380 roll-out,including videos and interviews check this out.

 

Listen to Alan talking about winning this year’s Airline Business Airline Strategy Awards in the Low-Cost airline executive category.

 

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