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Australian airline Qantas has cut bonuses owed to its former chief executive Alan Joyce by more than A$9.3 million (US$6 million) to reflect the damage done to his reputation in the final year of his tenure.
The decision is the result of a review launched in 2023 on management actions and culture at the airline known as the “Flying Kangaroo,” in a year in which its The stock price plummeted as it was discovered that he had sold “ghost flights” and illegally dismissed 1,700 workers.
Joyce, who resigned last year After 15 years at the helm, he was the main target of passenger and investor anger when it was revealed that the Irish executive was to receive a departure package of up to A$24 million. That sparked a shareholder rebellion, with more than 80 percent voting against his pay policy at its annual meeting last November.
The review, released Thursday and conducted by McKinsey partner Tom Saar, found there was “too much deference to a long-serving CEO” at Qantas and that a “command and control” leadership style under Joyce was part of the “root cause” underpinning the crisis that hit the company in 2023. He added that the board was “financially, commercially and strategically oriented” but should also have been focused on employees and customers.
Following the review’s recommendation, Qantas’ board of directors opted to cut Joyce’s short- and long-term bonuses due to the reputational damage caused to the company during the post-pandemic period.
The board of directors reduced short-term bonuses paid to senior executives by a third, equivalent to A$4.1 million, including almost A$1 million due to Joyce — to reflect the airline’s problems. It also decided that Joyce’s entire long-term incentive bonus — which was due to expire between 2021 and 2023 but had not yet been paid — of about A$8.4 million would be forfeited. He has still been paid A$14.9 million for the financial year to June 2023, even after the cuts.
Joyce was not immediately available for comment on the decision.
John Mullen, who will replace corporate veteran Richard Goyder as Qantas chairman in September, said the pay adjustments and leadership review would allow the new management team to “restore pride” to the airline.
“It’s important for the board to understand what went wrong and learn from past mistakes as it’s clear we let the Australian people down,” Mullen said.
Joyce had repeatedly defended his actions and potential bonus, pointing to the airline’s rapid financial recovery after it came close to collapse during the pandemic.
A decision to lay off 1,700 ground and baggage staff during that period was later deemed illegal and preceded a Customer service collapse This angered passengers. Last year, the corporate regulator sued the airline for selling tickets for flights it had already cancelled. That caused a 20 per cent drop in its share price and Qantas eventually admitted it had misled customers. As a result, it is paying a fine of 100 million Australian dollars.
Michael Kaine, national secretary of the Transport Workers Union, said there were early signs that Qantas had improved its methods but criticised Joyce for what he called the “destruction of an Australian icon”.
“This review is important because it verifies what workers, passengers and the Australian community have been saying for years: Qantas was a corporate dictatorship with a timid board, unable to speak up to Alan Joyce as CEO, who prioritised a toxic ‘profit at all costs’ culture,” Kaine said.
Qantas, now run by Vanessa Hudson, has invested heavily in improving its customer service and reliability. Its position in the lucrative domestic aviation market has held up despite its problems after low-cost competitor Bonza collapsed and regional airline Rex entered administration this year.