Qantas 2023 Annual Report Released

 By Rachel Waterhouse, CEO, Australian Shareholders' Association
 22 September 2023

On Wednesday afternoon, the most anticipated annual report for 2023 was released by Qantas.  

After weeks of persistent headlines, court cases, inquiries, scrutiny over the former CEO’s share sale, and questions about the Board and Chair's oversight, this report was always going to draw a lot of attention.  

The reputation of a company among its customers and employees greatly influences its success, and Qantas is currently facing challenges in this area.

Like many companies, particularly other airlines, Qantas experienced extreme operational and financial challenges during the COVID-19 pandemic, with the business coming to a standstill.  

However, decisions made during that time have impacted staff goodwill and eroded customer trust. 

The following decisions in particular have all affected the perception of the Qantas brand and undermined employee confidence: 

laying off staff;
 
allegedly selling cancelled flights; 

putting barriers in the way of using flight credits; and 

a lack of focus on positive customer experiences, 

So, how did the airline respond to ongoing concerns?  

Observations on the Qantas 2023 Annual Report:  

The ASA will be further analysing the annual report, will await the notice of meeting, and will be meeting with Qantas soon to discuss these matters.  

However, our initial observations are listed below.  

1. There are positive changes in the remuneration report:  
The short-term incentive plan scorecard shows a promising increase in the customer focus, with the weighting set to double from 20% to 40% for the 2023/2024 period.  
The introduction of a third measure focused on reputation in the 2024-2026 long-term incentive plan is a welcome development to focus on restoring trust in the brand.  

2. We have some concerns about remuneration:  
The report mentions a "clawback mechanism" in the case of serious misconduct or significant misstatements in Qantas’ Financial Statements.  
On this, ASA poses the question:  how will this mechanism be implemented if the Board and the CEO mutually endorsed those decisions?  

3. There are some questions about Executive penalties:  
The report states that the Board has decided to delay the delivery of the 2022/2023 short-term incentive award to executives in light of the Australian Competition and Consumer Commission (ACCC) proceedings.   
This raises concerns about whether it is fair for an executive who was not involved in the decision to have a delayed short-term remuneration and whether it could lead to retention challenges in the Executive Group, especially when substantial organisational change is necessary.  

4. The proposed renewal of the Board and the future direction of the carrier are not clear:  

The report indicates a focus on the renewal of the Board, emphasising a need for future skills and capabilities required for the organisation's challenges and opportunities.  

However, there is no detail provided about this:  

How will the Chair and Board lead this process?
  
What skills does the Board require?  

How will it find the right people?  

What accountability is the Chair taking for the decisions of the organisation over the last few years?  

What is the succession plan for the Chair?  

How will the proposed new Board members help in Qantas's transformation and trust restoration amongst customers, employees, and investors?  

The ASA will be scrutinising this renewal and asking some of these questions of the Chair and the Board.