I spent the past week in WA @edgescape - with no phone or internet coverage for much of it, hence zero content has been contributed to SM by me for over a week, and I noted that the Qantas pilot's strike on Wednesday was confined to only pilots working for Network Aviation, a Qantas subsidiary that operates in WA under the QantasLink banner, and the strike therefore only affected regional flights in and out of Perth, mostly between Perth and the mining towns in the north of the state.
It was the second week of their school holidays, so it was described by the ABC in a bit of a union-bashing article (obviously going for that balanced coverage angle as they are always described as left-leaning) as the union throwing travel between Perth and multiple regional communities into chaos and causing mining companies to scramble to secure alternative flights for the state's fly-in, fly-out workforce. Qantas said about half its regional flights were cancelled on Wednesday and that about 3,500 customers were booked on other flights.
We flew over and back on Jetstar (another subsidiary of Qantas) and were happy with the service and the fact that both flights left and arrived on-time, or slightly early in the case of the return journey to Adelaide - tailwinds. I am very aware that has not always been the experience with any of the Australian airlines in recent times.
I only ever hold airline stocks as short-term investments. They rarely make good long-term investments, as it's a very capital intensive industry - and every airline has massive capex requirements to keep their planes flying and replaced regularly with newer models plus their highest cost is aviation fuel over which they have little control. Like many other companies, airlines sometimes get sold down to rediculous levels where they can make sense to "invest" in a share price recovery, but I'd only ever do it over short periods of time, and I wasn't too interested when Alan Joyce was running Qantas - he's an absolute toad! Their Chairman, Richard Goyder is not much better; Goyder backed every decision Joyce made, including the illegal sacking of 1700 workers. And the $125 million that Joyce received in salary and entitlements (and bonuses) over the period that he was there. That's the first time I've come across a situation where a CEO does NOT earn their incentives due to the company losing money, but the incentives continue to accrue and are then paid out when he reports one good year and then leaves. He actually was paid every incentive he could possibly have "earned" during his time at Qantas - he just had to wait a bit longer to receive all the money. It's disgusting!
Further Reading: Richard Goyder urged by Qantas shareholder group to 'read the room' and resign | SBS News
Damien worked for Qantas for decades. His sacking was just ruled unlawful | SBS News
Alan Joyce's Qantas leadership: The defining moments as chief executive departs early | SBS News
Qantas court case: Consumer watchdog pushes for record $250 million fine | SBS News
The only airlines that consistently do well are those national airlines that are subsidised by their respective country's governments, and Qantas can NOT fall into that category because it would kill any hope of effective competition within Australian domestic air services in the future. Rex and Virgin would cry foul, and so they should. My point is that airlines don't generally provide superior TSRs for their shareholders over long periods of time and the main reasons for that are that it's a capital intensive industry and they face significant costs (like aviation fuel) that they have very little (or no) control over. It has also traditionally been a reasonably labour-intensive industry when you include all of the baggage handlers and ground crews as well as the pilots, flight crews, aviation mechanics and technicians (service crews), security staff, check-in staff, etc., and the more they automate those roles, the more strife they get into when their various systems fail, even for brief periods. It ain't easy! And not generally a good investment over decent periods of time, relative to the myriad of other superior alternatives out there.