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Friday, 1 June 1984
Page: 2375

Senator ROBERT RAY —Can the Minister representing the Minister for Aviation outline Government plans to give Qantas Airways Ltd more autonomy in the conduct of its commercial affairs?

Senator GIETZELT —The question of autonomy for the Qantas organisation is on the public record. The Government agreed last year not only to give substantial capital assistance to Qantas but also to give it the opportunity to operate on a proper commercial basis by allowing it greater flexibility and the capacity to manage its own affairs free, as far as possible, from government interference. Coupled with the $60m capital that was given to Qantas, this has had a remarkable effect on the capacity of that organisation to fulfil its statutory function. There has been a streamlining of the workforce and the organisation has sold some of its major property investments. This has enabled Qantas to establish a much better break-even seat factor. This factor had been acting to the detriment of the organisation's commercial viability. As a result of the commercial initiatives taken by the Government, the position has now been reached where the break-even seat factor has dropped from 70 per cent to 56 per cent. Of course, that affects not only the efficient operation of the airline but also its capacity to increase its rate of profitability.

I might say that in the four years prior to the election of the Labor Government Qantas suffered overall losses in excess of $120m because of the general problems of the economy and loss of fare support. However, it is pleasing to note that in the first year of operation following this Government's decision Qantas has turned in a $58.5m profit of which already it has been able to pay back $25m to the Government. It has turned an operating loss into a profit. If the rate of profitability continues, the decision to pump $60m into Qantas, which relieved that organisation of a crippling interest liability, will prove the effectiveness of the Government's proposal to put the company on a sound economic footing. The fact that the company is operating very satisfactorily is further proof that this Government operates on the principle of sound economic management.