In January 1995 Tony Lucas joined Qantas as a junior pilot – crisscrossing the globe as second officer in the cockpit of the famous Boeing 747-400.
As a graduate of flight school in Adelaide, winning a full-time job at Qantas felt like hitting the jackpot – joining the Qantas family, one of the world's most admired airlines, was not only a job for life it was a conversation starter, a career maker. He was living the dream.
A few months earlier, Vanessa Hudson had also joined Qantas, but as an internal audit supervisor. This was Hudson's first real job after a Bachelor of Business at the University of Technology Sydney and qualifying as a chartered accountant.
Compared with the glamour and prestige of a pilot's gig, running numbers in a back office must have felt like the airline industry equivalent of working behind the scenes on a movie set.
Yet 28 years on, Hudson is now Qantas's leading lady – from that unremarkable start in auditing, she has built a career that has taken her quite literally sky high.
As she prepares to leave her role as chief financial officer for Qantas and take over from CEO Alan Joyce in November, Hudson is not just the first woman to lead Australia's national carrier, she is now one of only seven women appointed to the helm of the globe's top 100 passenger airlines.
So what will the post-Joyce era look like for Qantas? What kind of leader will Hudson be? And what should she put on her to-do list?
The to-do list
Hudson and Lucas – who is now a check and training captain on the A330 aircraft and president of the Australian and International Pilots Association representing 2,250 Qantas Group pilots – each exemplify the path Qantas must tread over the next months and years as it moves past the bruising COVID years and enters a new phase of its history.
The Qantas veterans represent two faces of the airline: one rooted in the traditions and image that has underscored the brand since it was founded in 1920; the other with an eye on changes the airline needs to make to keep its business nimble in an industry with notoriously slim profit margins of around 2.5 per cent.
At the announcement of her appointment on Tuesday, Hudson tackled the idea head on.
"The experience that I've had, and also recently in helping manage through COVID, places me in a great position to look forward in terms of all the investments that are coming … but also continuing to invest in our customers [and] our people," she said.
"It is striking that right balance which is the most important thing for a successful organisation, but also a sustainable one."
There can be little doubt that the task facing Hudson is monumental.
She must rebuild not just the size of the workforce following COVID lay-offs, but crucially, staff morale.
Her own key CFO role must be replaced as she strives to ensure the loyalty of other senior staff – notably head of Qantas Loyalty Olivia Wirth, who came close to snatching the CEO role – to prevent the sort of brain drain that can occur during leadership change.
Customer satisfaction, shredded by delays, lost baggage and poor customer care during the pandemic, has been highlighted by both Hudson and Joyce as an urgent area for improvement.
Then there is the business itself. With renewal of the ageing Qantas fleet a priority, Hudson must oversee the funding and delivery of 300 new aircraft along with associated training of pilots, flight and ground crew.
On the upside, stock market strategist Henry Jennings believes while the new jets will be a financial juggling act they will also offer potential to improve the flying experience for customers, open new routes, and drive fuel efficiency.
Negotiating who will fly these new planes, in particular those marked for the ultra-long-haul routes from Australia to the UK and US, is another flashpoint as pilots push back against plans to look outside Qantas for staff.
There are legal battles, too, as baggage handlers pursue their case for compensation against pandemic outsourcing of 1700 staff which was judged illegal. It is a topic that will be raised again this week as Qantas heads back to the High Court.
Lingering problems with supply of parts, hedging volatile fuel prices – happily now in a low-cost cycle – and other nuts and bolts of the airline business will continue to demand Hudson's attention.
Winning back angry staff
Lucas's role as president of AIPA means he will work directly with Hudson, as he has done with Joyce who he describes as "always very charming when you deal with him one-on-one … with an incredible skill to pivot quickly back to his narrative".
While acknowledging any new CEO provides "an opportunity to take stock" he hopes Hudson's "long corporate memory" will make her a different kind of leader.
"It's rare to get executives who have started at the bottom of their respective [area]. I have a lot of respect for Vanessa," he says.
So what kind of leader will Hudson be? What kind of leader does she need to be?
"The staff who love the Spirit of Australia don't get to make millions in bonuses and then cash out," he says – perhaps a dig at Joyce who has earned many millions in salary, shares and bonuses during his 15 years at the airline. Make no mistake, Hudson will be well remunerated, too, with a base salary of $1.6 million announced this week.
Yet Lucas points out many pilots see Qantas as a life-long career and believes "that [understanding] is probably the thing that's been missing in recent times". It is a key reason why pilots felt so betrayed by pandemic lay-offs and outsourcing and current suggestions pilots for the ultra-long-haul routes will be hired from outside the Qantas pilot pool.
Lucas argues Qantas risks losing more than technical capability if it makes the work of a pilot "purely transactional".
"If this is going to become just a job, no longer a vocation, then I think Qantas will lose something of what it is to be Qantas," he says.
It's a theme taken up by Qantas engineers, who fought management last year over shift changes and lack of investment in tools essential to do the job.
"There is hope that a change of CEO will bring new thinking to the business, how to re-engage the employees and the travelling public," says one engineer who wanted to remain anonymous. "We hope Hudson will see value in the employees but engineers are a cynical bunch. We like to see evidence and action rather than lip-service so an overwhelming majority of us are reserving judgement at this time."
Is Hudson the 'continuity candidate'?
As CFO standing beside Joyce at Qantas HQ, Hudson can also be viewed as not just the brains but the brawn behind much of the bitterly contested COVID-era cost-cutting.
Professor Greg Bamber from Monash University Business School, and co-author of Up in the Air – an investigation into how airlines can improve performance by engaging their employees — views Hudson as "the continuity candidate".
"She's been very close to Alan Joyce so I wouldn't hold your breath for any major changes coming anytime soon," he believes.
Dr Chrystal Zhang, an expert in air transport management at RMIT University, agrees.
Hudson's approach to Qantas is likely to be influenced by the airline's recovery plan, a six-point agenda released in 2020 in response to the impact of COVID which prioritises financial stability and cost cutting to ensure profitability, Zhang says.
"I think the airline wants to have a very smooth leadership transition and wants someone who knows the airline inside out," Zhang says. "My interpretation [of Hudson's appointment] is they want someone who will commit to the goals they have set in that recovery plan."
Notwithstanding criticisms from employees and customers over cuts to staffing and services surely Hudson deserves kudos for getting Qantas through the pandemic at all? Joyce pointed out in his resignation press conference that the company had come within 11 weeks of financial collapse.
But Bamber is not moved.
"Much credit must also go to taxpayers," he argues. "We bailed out Qantas to the tune of more than $2 billion and during that time rather than reinvesting, Qantas laid people off and stood others down without pay. Qantas was very tough with its people."
The ramifications have not gone unnoticed by consumers – many of whom railed against the airline on social media as a result of lost baggage, delayed or cancelled flights and inability to reclaim credits.
Rebuilding the brand, and the business
More seriously, the Qantas brand has clearly suffered as a result of COVID and the decisions made in order to keep the airline in business.
In a Roy Morgan poll of Australia's most trusted brands taken at the end of last year, Qantas tumbled from ninth to 40th position.
But it's not all bad news.
This time last year Qantas was Australia's worst-performing airline for on-time arrivals and departures with only 58 per cent of flights keeping to schedule.
Qantas has since smashed that record, rising to the top of the pack above stablemate Jetstar, Virgin and Rex with on-time arrivals and departures now averaging just over 75 per cent.
Internationally, Qantas sits at fifth place in the globe's top 10 airlines, according to SkyTrax.
RMIT's Zhang says the SkyTrax result reflects the fact that Qantas's international reputation has not taken such a hit as it has domestically.
And half year profit results, at $1.4 billion, are strong off the back of high ticket prices and consumer demand.
Those ticket prices are "unreasonably high", according to Bamber from Monash.
Certainly, a seat on a plane is dramatically more expensive than pre-COVID and Qantas charges well above the price offered by other airlines on some sectors although these discrepancies are becoming less common.
"Qantas, as a quasi-monopolist in the Australian market, is making hay while the sun shines," Bamber believes. "Price gouging reflects a shortage of supply as people haven't been able to fly for two or three years and are keen to catch up with their friends and family and have face-to-face business meetings."
He believes this is an area Hudson must watch closely, noting ACCC chair Gina Cass-Gottlieb recently spoke out on Australia's competition framework which she described as "no longer fit for purpose".
What do the numbers say?
With four years next month as CFO, Hudson knows very well what the Qantas balance sheet needs to look like.
The airline has done well over the past year to claw back profit after the crushing losses of lockdown and its share price has shot up off the back of high fares, falling oil prices and a share buyback scheme.
While the profits are welcomed by shareholders, Bamber argues staff and customers would have been better served by ploughing more cash into improving service and conditions.
Meanwhile the share price closed Friday at $6.32, up from a low of $4.24 in July last year, representing a modest fall across the week due to market movements and Joyce's resignation.
Stock market strategist Jennings jokes the fall probably marks one of the few occasions Joyce would have been pleased with a share price dip.
"As CEO you don't want the stock to launch 10 per cent when you announce you're leaving," he says.
"Joyce is obviously doing a lap of honour between now and November and from a market perspective the important thing is that his replacement was an insider. It was no great shock."
However Jennings believes the share price is now "at cruising altitude" and unlikely to rally further in the short term.
He sees Qantas continuing to hedge its fuel bill while taking advantage of periods of high-demand for flights by keep ticket prices robust. With little current competition from lower-cost carriers such as those from China, Jennings suspects top tier airlines are cooperating to keep ticket prices high.
"It's a nice cocktail, if you like, for Qantas and of course you've got the demand still pretty strong despite the high prices," he says.
But he warns Qantas cannot risk relying on past loyalty: "Customers are only loyal up to the point where they have no choice."
This is the tipping point, Jennings says, where Hudson must work hard to balance the demands of the business with those of workers and customers.
"Being the hard man of the airline business is great if you are playing to that audience," he says of Joyce. "But you still have to back it up with a little bit of softness and I think Vanessa Hudson will bring some softness."
Certainly, Hudson was at pains to emphasise this point when her new role was announced on Tuesday.
"We were very up front in terms of recognising the customer experience was not where we wanted it," she said. "We've got to win customers, and we've got to win their support … not just every day but every flight."
Jennings believes Hudson's time as head of customer experience for Qantas will be beneficial as will the opportunity to step out of Joyce's shadow and lead in her own way.
"When the boss holds the future in his hands you have to tow the party line, but she will have learned from Joyce in terms of the mistakes he's made," he says. "For anybody in the number two position, you have experience you've gained but you also want to put your own mark on the company because you've been waiting in the wings, hoping you're going to get your chance."
The gender card
Much has been made of Hudson's gender, with a tendency to link her reputation as an empathetic leader to the fact that she is a woman.
Such ideas can quickly risk stereotyping – a business as important as Qantas no doubt appoints the best person it can find.
Yet in his resignation speech Joyce implied it was also in Qantas's culture to embrace diversity at the top.
He became emotional as he praised the Qantas board for appointing "a gay Irish man" as CEO 15 years ago: "And now we have the first female".
Zhang believes the fact that two women – Hudson and Olivia Wirth – appear to have been the last candidates for the job is more than symbolic.
She says research is revealing evidence that genuine differences do exist between male and female leadership.
"Generally speaking female leaders are relatively flexible, adaptable and they are transformational," Zhang says. "They are also more collaborative when compared with men who are more transactional and target focused.
"Personally I believe that as a leader you have to be goal focused but it is how you manage people and the process for getting other people on board to work together with you that highlights different approaches."
Certainly, Hudson has built a reputation among her Qantas colleagues for emotionally intelligent leadership and has described her style as "very collaborative" emphasising that she canvases a wide range of views "but then you act decisively and quickly".
Zhang across aviation in Australia women are in other key positions.
They include Jayne Hrdlicka at Virgin Australia, Stephanie Tully at Jetstar, Melbourne Airport's CEO Lorie Argus and at Perth Airport, Kate Holsgrove is acting CEO.
"These are very prominent aviation players in the Australian market and collectively I think they send a very strong message to the aviation community that we are front runners in advocating for gender equality in the sector," Zhang believes.
Zhang repeats the idea that while profitability will remain Hudson's focus respecting and harnessing the emotional attachment customers and staff feel for their national carrier is Qantas's hidden superpower.
"We know how easy it is to damage a brand. After COVID, Qantas is in a position where it has to invest double or triple effort to ensure the brand and its reputation is restored, particularly in the domestic market," she says.
Staff, like pilot Lucas, will argue that this emotional connection to Qantas is precisely the magic ingredient that has made the company so successful: it underpins its safety record as employee after employee goes out of their way to do the job to perfection.
"I'm a long-term Qantas diehard," Pilot Lucas says. "To me it's always been about the brand and the Spirit of Australia."
And as Hudson begins the transition from Qantas veteran to piloting the business as CEO, there is a sense that Qantas staff have their fingers crossed she is still one of them.
Story By: Catherine Taylor
Original Story link: https://www.abc.net.au/news/2023-05-07/qantas-ceo-vanessa-hudson-alan-joyce-what-happens-next/102312352
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