Questions have arisen over the timing of outgoing Qantas CEO Alan Joyce’s decision to sell almost $17 million worth of shares, which happened before a string of controversies marred the airline and caused its share prices to plummet.
Mr Joyce sold most of his 2.5 million Qantas shares – which he had accumulated since 2012 after becoming chief executive – on June 1, when they were trading at $6.74.
He pocketed just shy of $16.87 million from the sale, and was left with about 229,000 shares in the company.
In August, the outgoing CEO was asked to explain why he sold the majority of his shares in Qantas well before he was due to depart the company – initially scheduled for November, though that move was accelerated this week.
Mr Joyce told reporters he had to sell for a “personal purchase”.
“Ah, well, I still have a huge amount of shares there I hold but I had to sell shares for a personal purchase I was making,” he said.
“It was the timing to do it given the market update, all information was disclosed. But I’m still a very large shareholder in Qantas and I more than meet the minimum level that the CEO is expected to hold by quite a multiple amount.”
And the timing of his cash out was absolutely spot on, Ten News veteran Hugh Riminton observed, because Qantas’ share price has taken a nosedive in the four months since the sale.
Mr Riminton took to X, formerly known as Twitter, to note Mr Joyce’s “savvy” timing. He noted that Joyce sold his 2.5 million shares on September 4, when they were trading at $5.65 a piece, he would be $2.75 million “poorer”.
At the end of trading on Monday, Qantas shares hit their lowest level since October 2022.
There are no suggestions of any impropriety or wrongdoing on Mr Joyce’s part, or that he sold the shares at a time when Qantas had not complied with its continuous disclosure obligations.
Law and corporate governance expert at Swinburne University Helen Bird said the sale shows how, eventually, “reputation hits the bottom line”.
Qantas’ reputation has taken a beating this week, with allegations that the airline sold tickets for “ghost flights”, a grilling by senators over costs, backlash over bonuses, and a blowout in Covid refunds.
It has been the sour cherry on top of months of simmering public discontent for the Flying Kangaroo after its rather turbulent return to the skies once borders reopened – marred by reports of lost and damaged baggage, delayed and cancelled flights, and its struggle to rehire workers lost during the pandemic.
Ms Bird said all of those issues were “fuzzy and not necessarily important until the stock market price drops”.
“Then it’s financial, and once it becomes financial then we sit up and take notice,” she told news.com.au.
“The (stock) price dropping so significantly is a real sign that stakeholders and customers have reached a point of no one believing anything Qantas were saying about the issues they’ve raised.”
According to Market Index analysis, Qantas’ stock price has dropped 15 per cent since Mr Joyce sold his shares in June.
Ms Bird said Qantas’ focus on the “short-term game: by cutting costs, running things down to the bare minimum” shows it did not foresee the long-term gains to be made; and that the airline must now bear the cost.
Brand Finance Australia managing director Mark Crowe said the Flying Kangaroo’s fall from grace, especially this week, is a “classic case of the higher you climb the further you can fall”.
“I think an alignment with reputation is trust, and Qantas is an iconic Australian brand with enormous heritage and is synonymous with aviation in Australia,” Mr Crowe told news.com.au.
“It has become a brand that reflects a lot of Australian imagery and identity, and around 10 years ago they were the strongest brand in Australia but our data shows they’re not anymore.”
Brand Finance Australia’s ranking of the country’s Top 25 brands – as of January 2023 – Qantas sits at 17th place. It ranks below Rexona (16th), Devondale (15th), and RACV (14th), and Crown Resorts (13th).
Mr Crowe said Qantas’ strength has plummeted because of a number of factors: the damage to its reputation, value for money, recommendation, and loyalty. And, he believes the full extent of the crisis of faith is only going to get worse for the national carrier.
“Once you have these reputational issues then every single issue in aviation and in Qantas alone becomes magnified and snowballs,” he said.
“When a brand is in decline it can be very hard to arrest unless there is very decisive action.”
Mr Joyce’s earlier resignation may be the “circuit breaker”, Ms Bird said, needed to pull Qantas out of its nosedive from public favour.
But, she said there were “hard questions” for the company’s board to answer.
“You can get rid of the CEO now, but how could you allow it to get to this point? Why weren’t you paying attention? Why weren’t you interested in what was happening to the company?” she asked.
Qantas has issued a grovelling apology to customers over allegations of “false, misleading and deceptive conduct” by the Australian Competition and Consumer Commission, acknowledging its “service standards fell well short” and was working “hard to fix them”.