Hi, I'm Ruby Jones and you're listening to seven Am. Quantus has been told it's the wrong kind of sorry. Five years after illegally outsourcing eighteen hundred ground staff, the airline has been hit with a record ninety million dollar
penalty on top of compensation for workers. The court's judgment also questions whether Quantus's remorse is real or just for show at a time when the company is promising cultural change under a new chief executive and a new chair Today Rampart founder and author of the Chairman's Lounge, The Inside Story of How Quantus sold us out. Joe Aston on what this ruling means for the airline and whether
anything has changed since Alan Joyce's departure. It's Thursday, August twenty one, So Joe, thank you for joining me on zevn am my pleasure. On Monday, Contus was ordered to pay a ninety million dollar fine for illegally sacking eighteen hundred workers back during the pandemic, and in delivering his judgment, Justice Mike Ouley called Contus the wrong kind of sorry. So tell me what you made of his comments and of the decision more broadly.
Well, I mean I've been watching this case for a long time. It's been a marathon. The first try, the actual original liability trial, was in twenty twenty one, in the middle of lockdowns.
Federal Court will decide whether Quantus acted illegally when it sacked hundreds of Melbourne ground crew and gave their jobs to a cheaper contractor the unionit You know, then Quantus had lost that case and then appealed straight to the Full Court.
The Federal Court found the decision to outsource about two thousand groundworkers was in breach of the Fair Worked Act.
Town and then they lost that case in twenty twenty two, and then they appealed straight to the High Court and they lost that case in twenty twenty three.
The Court has dismissed unanimously Quantus's appeal. It now stands their actions against these Quantus families as the largest sacking in Australian corporate.
History, who were sent back to the Federal Court to decide on the compensation that they should pay to those workers, and that was decided.
In twenty twenty four that they should pay one hundred and twenty million dollars.
Quantus has been forced to pay more than one hundred and twenty million dollars in compensation to workers whose jobs were legally outsourced during the pandemic about eighteen and only now in twenty twenty five have they been hit with their penalties.
Quantas has just been fined ninety million dollars for illegally sacking eighteen hundred ground Star five years ago.
Has just been sort of this incremental debacle unfolding which Quantus until the very last minute was fighting. Even when they lost in the High Court, the then chairman of Quantus, Richard Gouiter, was dismissing the ruling of the court and saying, well, look, we had sound commercial reasons for that decision. Justice Lee was quite brilliant in pointing out how completely silly that
argument is. Of course they had sound commercial reasons. I mean, what kind of an outsourcing would it have been if they didn't have sound commercial reasons. It was just a bizarre reasoning that they were offering. You know, we engaged in illegal behavior because it made us money.
Now that doesn't make it okay. So it wasn't just the illegal outsourcing.
It was the way they conducted themselves, even when they were found to have done the wrong thing by a court afterwards, and Justice Lee also this is one of the big reasons why he didn't believe that they were really sorry. Only last year in twenty twenty four, Quantus was arguing in the compensation hearings that the workers should get zero dollars of compensation. That was actually the argument being put to the court by Quantus that the workers
should not get any compensation at all. That's obviously not an argument that it suggests a company that is feeling contrite about its wrongdoing.
Okay, so we had the company at least initially arguing that there should be no compensation for workers. They have now been ordered to pay a ninety million dollar fine. So let's talk about that for a moment. How does that amount compare with what Quantus wanted versus what the union wanted.
Well, yeah, I mean the fine itself is staggering, by far the biggest fine ever imposed on a company for a breach of general protections under the Act.
The last highest ever was ten.
Million dollars against the Commonwealth Bank for an underpayment issue that went over a decade. The fine is generally paid to the party that is bringing the case, and usually that party is a fair work gombodsman who prosecutes breaches of the Act by employers. But of course in this case, the ombudsman was fast asleep and the union decided to take the action itself. And that's what's really unusual about this. That's such a huge amount of money is being paid to the union.
Right and so so does that money then go from the union to the workers? Have they said how to be divvied up?
So the penalties, ninety fifty of that goes to the union and then the other forty will go to the workers on top of the one hundred and twenty million that they were already getting in compensation. But you know, if you look at how many workers were illegally sacked, there's eighteen hundred it Actually, you know, this is not sort of life changing money for people who've lost their livelihoods. The forty million dollars split eighteen hundred ways, that's only
twenty two thousand dollars per person. So for someone who's lost a long term, a good paying blue collar job, that's not going to get them over the line.
And it's been a year now since Quantus announced that it was slashing Alan Joyce's payout by almost ten million, and that was partly because of his handling of this. And at the time, Quantus acknowledged the harm that had been done to their reputation, particularly with their customers, and they commissioned a review to tell them how to fix it. So what did that review end up saying? And has the company implemented any changes?
Yeah, well, the review was damning and the review found that Quantus had a terrible culture and it had a board that was too weak to challenge the CEO, Alan Joyce, and this case the legal sackings was one part of it. But you know, you remember there was also the ghost flights, the issue of COVID credits and the way customers were really poorly treated by those. There was a huge amount of price gouging. There's a massive suite of issues that
were affecting Quantus's reputation. Now, what has actually changed a lot of that is sort of at the surface level. I think it's fair to say that Quantus under Vanessa Hudson is a company more focused on its customers and on its staff than it had been previously. But you know, does it still charge the highest possible fares that it
can on routes where there's not very much competition. Absolutely, does it still invest insufficiently in new aircraft to improve the experience and reliability for its customers, Absolutely, you know, and also, by the way, to reduce the impact on the environment. So Quantus has changed its bedside manner. I think that's fair to say, and that's not nothing. That's an important thing. But if you look deeply, Quantus.
Is still a very aggressive company, right, So the underlying strategy might not have changed even though Joyce is out of the picture. So what ongoing benefits does Joyce get as a result of the time that he spent there.
Well, I mean, you know, he made one hundred and thirty million dollars a CEO of Quantus. That's pretty good coin if you can get it. And he's got a golden ticket. It's like the one they give you in Charlie and the Chocolate Factory, except instead of unlimited chocolate, it's unlimited first class flights for life.
After the break. What Quantus says it's learned and what its profits really show Joe Quantus for the past year has been run by Vanessa Hudson, So tell me a bit more about her and how she's approached her role so far.
Yeah, well, Vanessa Hudson's even more of a Quantus lifer than Alan Joyce in that she started at the company. I think it was almost her second job in the audit department, which is a very exciting place, as you can imagine, in nineteen ninety four, in her twenties, and
has worked right across the company. When I worked at Quantas in the late two thousands, she was running customer product and service inflight product and service when the airline received its first day three eighties, and then she's gone and run the American division of Quantus. She came back and was chief customer officer briefly and then became the chief financial officer. So she's really worked right across the company,
and she became the twenty twenty three. Her pitch to the board of Quantas for the job is, I'm not going to change anything. I'm going to be just like Alan Joyce. Now, as Alan Joyce became absolutely toxic in the dying months of his reign, she had to very quickly change that plan and try to distinguish herself from Joyce and be someone different.
We want to get back to the national carrier that Australians can be proud of that's known for going above and beyond. We understand we need to earn your trust back, not with what we say, but what we do and how we behave.
And she has to keep the shareholders happy, she has to make up with customers, and she has to make staff feel like it's worth going out there and putting themselves on the line every day. For those customers, she's sort of done pretty well. For the shareholders, they're very happy. The share prices more than doubled since she's been in charge. And in terms of making up with the customers, the
right noises are made, but they will never admit. But every senior executive at Quantus knows that they only have to be so nice to their customers, but really they'll keep coming back for more punishment because the customers just don't have other options.
And it's not just the chief executive who has changed. Last year, John Mullen became chair. So what impact has he had so far?
Ah?
Well, Look, I think John Mullen's someone who has a really good sense of you know, what the average person on the street thinks and feels. You know, He's somebody who's really quite in touch. And that's a good thing for Quantas because that's how this happened in the first place. Alan Joyce was living in his own world and his
board was subservient to him. So even though they might have had doubts about how angry Australia was at Quantus, they weren't prepared to challenge Alan Joyce to do anything about it. Put it this way, there's no way in the world that Vanessa Hudson is going to be telling John Mullen what to do. And there's no way in the world that John Mullen's going to be too afraid to pull Vanessa Hudson into line. And that's the way companies are supposed to be rung.
Okay, And so have we heard from John Mullen since this ruling came down on Monday.
No, we haven't, and it's probably not for him to comment at this stage. But you know, look, there's no doubt that John Mullen has got Vanessa and her team
really focused on cultural change. But I just find it really disappointing that, given the opportunity and everyone was pointing this out to them at the time in twenty twenty four, that they continued to argue that the workers should get zero compensation because that's a really hard thing for them to defend, and it just opens them up to the absolutely legitimate criticism that they're all taught that the cultural change is about a surface appearance and not actually about.
Root and branch.
You know, should we do the right thing even when it's expensive. Should we do the right thing even it's when it's painful. I think that's really regrettable. And this is the thing about company culture. Everyone thinks that company culture is something that everyone is part of, and in some ways that's true, but the real truth of it is that company culture is really set by very few people at the top, and it is the values of
the boss that emanates through the organization. And Alan Joyce had some executives around him whose judgment was very poor when it came to ethical decision making, and the court has ultimately found that Joe.
There is this line in Justice Lee's ruling where he says that Quantus is pleading virtue only when cornered and feigning contrition while harboring it no genuine regret. And I think that really goes to everything that he kind of said when handing down this decision. So how does that square with the culture that you have observed at Quantus over y'all many many years of reporting on the company.
Well, it's confirmatory of what I was just saying about, you know, being very sorry, as saying that you're very sorry, but then saying to the court, well, please, we don't really want to pay these people any money for what we did to them. It's very hard to argue that that is actual, deep and profound cultural change and not just a sort of air brushing of the ugly things from view. Bear in mind, Quantus has a lot of
reasons not to be sorry for doing this. Look at the numbers, right, So they've spent almost a quarter of a billion dollars on this case, one hundred and twenty million dollars in compensation, ninety million dollar fine, at least twenty or twenty five million dollars in legal fees, and even then there's still ahead financially because although they've been publicly shamed and humiliated, and the chairman had to resign and the CEO had to resign and all of these
sort of all these executives had to resign.
And all sorts of calamity befell them.
What actually happened is by sacking these people illegally, they saved one hundred and twenty five million dollars every year on wages, and they avoided eighty million dollars of.
Equipment costs that they were going to have to invest in.
So it's been five years now, but that's almost seven hundred million dollars they've already saved by doing what they did, versus the two hundred and something million dollars that they've had to pay for the infringement.
So like, yeah, they have.
To look like they're sorry, but I bet there's plenty of people in the company who just very quietly say that was a ripper decision. We've made more money for our shareholders, and so you know, we all have to send the right signals, but we do it again ten.
Times out of ten.
That's something the government needs to think really deeply about, because there's something wrong with a country where breaking the law is cheaper than complying with the law. We're breaking the law is so financially rewarding that, to me, signals are problem with the law.
Well, Joe, thank you so much for your time today.
My pleasure. Thanks Reuby.
You can read Joe Aston's work at rampart dot News. Also in the news today, the Victorian government has responded to a rapid review of the childcare sector, commissioned in the wake of several reports of sexual assault of children in childcare centers across the state. The review found the Victoria's childcare watchdogs are failing to keep kids safe due to chronic underfunding and a system that places the privacy of educators and the pursuit of profits over child safety.
The Victorian government has committed to adopting twenty two recommendations made in the report, including a strengthening of safety checks and mediators. Are awaiting an official Israeli response to a ceasefire plan with musk after Hamas signaled its readiness for a fresh round of talks. Egypt and Qatar, who have mediated frequent rounds of negotiations, say a new ceasefire proposal has been sent to Israel and Israel's response is the next step towards an agreement. I'm Ruby Jones. This is
seven am. Thanks for listening.
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