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Qantas posts its first loss. Can it learn from the US?

Qantas CEO Alan Joyce and CFO Gareth Evans have delivered the company’s first loss since the airline was privatised in 1995. AAP

Qantas should look to the US airline sector, say academics specialising in aviation, as it seeks to turnaround its international division and get back in the black.

Qantas today posted a $245 million loss, it’s first loss since being privatised in 1995, and cancelled a multi-billion dollar order for Boeing 787 Dreamliners as it faces volatile global conditions, fuel prices and exchange rates.

“The only region in the world where full-service carriers are holding their own is the US market, which has been through dramatic consolidation,” said Ian Douglas, senior lecturer in Aviation Management at UNSW.

“That’s the only place where airlines are now looking like delivering a return on capital.”

Dr Douglas said Qantas is in an awkward position as it continues to compete on international routes with state-owned airlines that have owners who are willing to forgo profit or any return on capital, in order to grow.

“I think the strategy they’ve adopted is the best they can do for the circumstances they’re in,” Dr Douglas said.

But Greg Bamber, Professor in the Department of Management at Monash University, said Qantas needs to rebuild the relationship with its workforce in order to ensure it can successfully compete.

“In a service sector like aviation, the future is with providing excellent customer service, and to do that depends on having good relationships with the owners, managers and the people who work in it.”

Professor Bamber said the long-term battles Qantas has been engaged in with its pilots, baggage handlers and engineers, have detracted from those relationships.

“I guess Alan Joyce waiving a couple of million dollars of his bonus is one symbolic way of trying to heal those wounds, but it was amazing the bonus was there to be waived given the results are so poor.”

Professor Bamber has in the past pointed to America’s Southwest Airlines as an example of one airline achieving high levels of employee and aircraft productivity.

The cancellation of the order for new planes also may not be a wise move, said Professor Bamber.

“Part of the reason Qantas has been losing money is it’s running a geriatric fleet of 747s, and the Dreamliners are more fuel efficient.”

But Dr Douglas said while older airliners burn a little more fuel “I don’t think delaying the purchase of the 787s is going to kill the Qantas business.”

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