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(generated from captions) familiar with the letter. This

is fundamental. Can I say intention - various is fundamental. Can I say the

complexities with traffic

rights where you have to

the witness could be shown a actually apply - I wonder if

copy of this letter. I'd like

to table it, chair. As such, Senator Xenophon? Tony has to table it, chair. As such,

clarified what I thought was

the case. There's no intention

with that note and application

for the replacement of Qantas

flights. That is enabling us

to allow us to put the Jetstar Australia

Australia code, Jetstar Asia code, on to those international operations.

Can I ask a Can I ask

couple of questions in couple of questions in relation

to the grounding of Qantas last

Saturday. As you went into the

AGM just a week ago AGM just a week ago last

Friday, what prospect did you

think there would be a grounding of the fleet that announced just a day later? I grounding of the fleet that you announced just

didn't have any view on the

prospect of it. You didn't have

any view at all? I went into

the AGM and has Lee Clifford

said at the AGM we had to believe this would be believe this would be a watershed moment because there watershed moment because

was a lot of debate and die -

dialogue going around because .

At that meeting we had overwhelm ing support from the shareholders. We had - we did, we

we had 96, 97% support we had 96, 97% support for the

- we had 96, 97% for the resolution for the resolution for the directors.

We thought, we did think that

that were to act as a watershed

and Lee Clifford said at the

time and it was only when we

had commentary - I'm sorry, I

understand but can - Can I

finish the question because

only then we felt it was

then escalating and there was talk

then of 48-hour strikes, talk

again of this thing lasting for

another year that I decided another year that I decided on

the Saturday to call a board

meeting and made the decision meeting and made the

that we're going to ground that we're going to ground the

airline. I called the board

meeting at 10:30. Board meeting took place at unanimous support from the took place at 10:30. I got

board. Then go through the time

line. I called the executive committee and

committee and this was not

planned because I couldn't contact Bruce planned because I couldn't even

contact Bruce at the start.

Bruce was with his architect

planning building of a house

and we had to try and track him

down at 12:00 to say down at 12:00 to say actually what was taking place. Then we

to ask a couple of technical started the calls. I just want

questions about that. You received board approval for the decision? No, the decision was

a board endorsement. It was decision. So it was your a board endorsement. It was my

decision using your management decision. So it was your

prerogative? Yes. So what delegated authority do you have

from the board to undertake a

complete operation discretion decision such as this? I have

but I knew this was because but I knew this was because I

made a decision to ground the

A380 when the engine explosion

happened a year ago. I made the decision to ground decision to ground the airline

when the volcanic ash occurred. I've got complete I've got complete operational

decision for commercial operational reasons. I decided decision for commercial and

to have a board meeting because

of the brand implications and

the significant implications

around this to make sure that

the board was comfort yanl with

the decision and we had

unanimous endorsement from the

board I'm trying to understand

this. You made a decision on

using your your own using your discretion,

using your delegated authority? Yes. Are there any

limits to your delegated

authority, is there a monetary

limit, for instance, presumably

you can't decide to buy a A380s as an operational you can't decide to buy a dozen

decision or can you? No, I

can't. On capital expenditure

there are limitations. What that limitation? It's $40 there are limitations. What is

million is my cap on million is my cap on capital

limitations. On operational, operational issues I have

unlimited - So you have to go

to the board for anything more

than $40 million in capital

expenditure, you could make a

decision that could - that

could cost the airline, for

instance, 50, 100, $200 million there's no limit to the operational side I have there's no limit to that? On

complete au tonmy on what we

need to do because I have to make decisions make decisions every day that

can cost the companies tens, $20 million dollar. Significant

operational decisions that are

made every day and the made every day and the board has delegated me that authority

tho spend what money is needed

at any appropriate time and

that's very appropriate for a

company that takes safety as

its top priority we want to

make sure that I have make sure that I have complete

au tonnemy - autonomy to spend

what I need when I what I need when I

need. Finally on this, so for a

momentous decision to ground

the entire fleet, to stand down

27,000 employees that was all

on your head? That was my decision, absolutely. Thank

you. There are a number of

senators who want to continue

Senator on the same point. I'll go to

Senator Gallagher Senator Gallagher first,

Senator Abetz and Cameron. Thank you, chair. Cameron. Thank you, chair. Mr

Joyce, in your CEO's address to

the AGM you said we will

protect and grow Australian

jobs over the long term. We

for you, our shareholders, and will create sustainable value will create sustainable

we will make Australians proud.

That's your closing remarks.

Can you explain to this committee how committee how your actions on

the next day achieved stated objectives? I can, the next day achieved those

Senator, because let me explain to

to you my decision making

process on this. I felt that process on this. I felt that we had three alternatives made available to us as a

consequence of what's taken

place on the industrial, with

the industrial action. I could have capitulated to the demands have capitulated to the demands that were being asked by three

of the unions. Our belief was that those demands, my belief,

strong belief is strong belief is that those

demands were going to endanger

the future of the company. This

is a company I feel so passionate about. It's a

company that I want to make

sure is going to supply for sure is going to supply for the

future. The easiest thing I

could have done is probably to

capitulate but I thought those

demands would have put this

company at risk, severely company at risk, severely at risk.

risk. Secondly, I could have

decided that we continued the

way we were going, we'd already

been in dispute for been in dispute for months.

We'd already been in a dispute

that cost us, as I said at that

AGM, $68 million. We'd already

had 70,000 passenger s disrupted. We'd already seen

hundreds of flights cancelled.

We've already seen We've already seen forward bookings absolutely collapsing and

and our forward bookings and every indicator that we had people

people were not travelling

people were not travelling with

us, people decided that Qantas

was not going to be reliable. We

We had union leaders talking

about a slow bake over a year.

We had union leaders say do not book with Qantas book with Qantas over

Christmas. We had union leaders

saying this could last into the

middle or end of next year. So we knew we were losing our

customers rapidly and at $15 million a week that was million a week that was costing

us meant we were at the verge

of a huge crisis in Qantas and we needed to do something. The

only alternative that was only alternative that was left

to me was to bring this to a

head to say we cannot last

another year. So therefore the

decision was made that decision was made that we would take, as a consequence of the

union action, a lockout of the

employees and it was only the

employees that were taking the action incurred by those agreements, we made agreements, we made it clear to

the rest of the employees that

we were going to continue to

pay them and continue to pay

their salaries and we felt that

was the only way that we could

get - the only viable way that we could get an agreement that

was not going to endanger was not going to endanger the future survival of future survival of the company. Mr With company. Mr With Senator Gallagher's permission there

needs to be clarification on needs to be clarification on

the end of Senator Xenephon's

questioning to Mr Joyce. Senator Cameron has one very

quick one. Senator Abetz you need one clarification after Senator Cameron and then I Senator Cameron and then I will go back to Senator Gallagher. Mr go back to Senator

Gallagher. Mr Joyce, if the board board hadn't endorsed your decision would the

been grounded and if the board

hadn't endorsed your decision would you position as chief

executive executive been tenable? Senator, I mean it's

hypothetical s. The board did endorse the decision

unanimously and absolutely were

fully behind this and the board

today is absolutely fully

behind it and believes it's absolutely the right thing to absolutely the right thing to

do. I don't think it's a hypothetical like that. I don't

know and I don't know what

would have happened. All I know

is what did happen and I had

full board support behind

us. Did the board feel us. Did the board feel ambushed

by your position the same as

the travelling public were

ambushed. Senator Cameron, I

will come to you and I will

give you the call and in all

fairness under my chairmanship

if we say we have one we stick to the deal and I will to the deal and I will come back to you. Senator a I back to you. Senator a I Betts you have one for clarification. Following on

from Senator Xenephon, I think

he was asking about your authority, Mr Joyce, in

relation to the grounding of the

the airline. I assume the airline. I assume that

there's been a lot of confusion

in the public mind and if in the public mind and if I

might say with a lot

might say with a lot of commentators and media ground ing

ing is different to ing is different to a lockout.

Does the same authority Does the same authority of which Senator Xenephon was

asking you about in relation to

grounding also apply to chair. Thank you, Senator Abetz. Senator Gallagher. Mr

Joyce, thank you, chair. Your

CEO address raises a number CEO address raises a number of points, I have some quite

specific questions on those specific questions on those

points so I want to points so I want to briefly

refer to them. We've refer to them. We've invested heavily in Qantas' premium

domestic business. Best

network, lounges, loyalty

program. How many new aircraft

have you put into the Qantas domestic premium business this

year? I'd have to take that on

notice, Senator, but I do know

I think I said in the speech or

in the transcript that during

my 3 years as CEO of Qantas we've we've taken delivery of 80

aircraft and over 60 of them I

think have gone to the Qantas

brands. But let me take that on

notice and we'll confirm it. I

will say again, Senator, will say again, Senator, that

the vast majority of capital that we're expending that we're expending has actually been actually been spent on the

Qantas brands. A380 is an

example cost us over $300 example cost us over $300

million. That's the price of 5

A320s that were going to JetStar. So the entire fleet of

A380s that we have is A380s that we have is actually more than the entire fleet, and

that's just one part of the

Qantas fleet, the entire

JetStar fleet. So we're JetStar fleet. So we're still

putting - and I'm very proud of

the fact that we're putting a

lot of investment lot of investment into the

Qantas brand but we need the

Qantas business to make money

in order to justify that in order to justify that investment. So the premium

brand, my investigation is brand, my investigation is it

had one aircraft this year. You

mentioned JetStar, it's a big

success, the two brand strategy

has ensured swre a 65% domestic

market share. I put it to you

you put 10 new aircraft into

JetStar this year? We probably

have Thank you, thank you,

that's all I need. I will come

back on it but I think and I can clarify with

can clarify with the guys here

I don't think one aircraft for Qantas is absolutely not the

case. There's more than one aircraft

aircraft that's gone in Qantas

this year. Premium domestic

business. Qantas business in

total and I think in the

premium domestic business

premium domestic business -

I'll come back to you on how

many has come in. You say many has come in. You say that the international's down $200 the international's down $200 million and Senator million and Senator Xenephon asked for asked for some explanation about your accounting

processes. Your board member James

James Strong is on the rorpd as say - record as saying the

historic success of Qantas as a

carrier was getting its choice

of jet correct. Malaysian,

Singapore, Etihad, Emirates, Singapore, Etihad, Emirates,

Cathay all operate 777s. Your

asis delayed and not on the horizon. Reading the industry

press the 777 is a 30% more

efficient plane than you operate. Do you accept any of

those assertions that are those assertions that are quite regularly made in the financial press about your

business? Well, I think you

have to go back to the history

and address this at the AGM. and address this at the AGM.

First of all those fleet

decisions were made a long time

before I was CEO. They were

made all the way back to made all the way back to when James Strong was CEO. If I James Strong was CEO. If I did have a problem with them I

could actually declare that

they're a problem and that's

one of the reason why Qantas is

a problem and I would. 30% more

efficient. Let me explain, I

think, why that is the think, why that is the right

decision for Qantas. You go

back every aircraft back every aircraft type and every airline has to every airline has to make decisions on what their critical missions are, what are the operations that are

important for them, the important for them, the lebt of

services, the amount of volume

what we call the scheduling

windows associated with the

time slots that are available

and in the airlines look at each individual each individual aircraft and

say what's better for them. Qantas has a unique Qantas has a unique operation

so some of the air-Yasser


Arafat thatdy aircraft that

work in other operators don't

necessarily work in Qantas. necessarily work in Qantas. In

2000 when we made decisions to go with the A380s for example,

there wasn't a variant of the

777 that had the range to get to Los Angeles or to do our

critical missions. It didn't

exist. That aircraft became available so we committed to

the A380s, that was the the A380s, that was the prime

aircraft for our ultra long haul international operations. haul international operations.

Then in 2003 the 777, 300 ER

became available. That was an

aircraft that did have the range. We'd alright committed

to the A380s and we knew on the drawing board it was a new aircraft that was going to be made available which was the

787. The 787 is new 787. The 787 is new technology

and it leap frogs the 777. and it leap frogs the 777. It's

got an absolutely better got an absolutely better fuel efficiency than existing technology by technology by 25%. It gives us

a better economics than the 777

will and it gives us a range

that actually provides us. that actually provides us. So

when the 787 became available

we were one of the first airlines in to take a

and actually, you know, Boeing

and Airbus come to us to help design aircraft because design aircraft because they

know we know our stuff. They

actually know we know actually know we know what's

the right aircraft to the right aircraft to pick and how to how to pick it. We got that

aircraft designed to a lot of

respect. Now today we have respect. Now today we have this

order of A380s which cost order of A380s which cost is

lower than the 777-300 ER. And for the high for the high volumes markets to

L apd and London where we don't

have the ability to add extra frequencies because frequencies because they don't

add any value the A380 is the clear winner. To clear winner. To markets clear winner. To markets in

Asia where the 777 could be too

big of an aircraft and a 787

has got lower fuel burn and

better seat miles per trip and

it's significantly better per

trip than the 777 that is the better aircraft and the 78

gives us another advantage, it

gives us an aircraft that we can use both can use both internationally and domestically whereas the and domestically whereas the 777 doesn't, it's too big for

domestic operations. I think

it's absolutely the it's absolutely the right decision for this company in

terms of the fleet that we decided. decided. Qantas has some of the

best people in the world that

makings these fleet decisions. Absolutely and

that's been a long historical

factor in the success of

Qantas. The point I tried to make is your competitors make is your competitors who

are taking the 92 or 82 people out of out of Australia are operating

more fuel efficient aircraft

that are flying now and the 787

has repeatedly been delayed and

you won't have it for a couple

of years? We won't because I

think the wait will be worth

while because we'll leap frog

those competitors. Fuel is only

one component, per seat mile

cost the A380 is significantly

better than the 777 and that's

the aircraft we're primarily the aircraft we're primarily

using on our international long

haul operations. So this inquiry now is really looking at the survival of the Qantas

brand in my view, particularly in in its domestic and

international business. have important and exciting initiatives in Asia but once

again my question goes to the

core business, you're going to

buy or put 24 new planes in JetStar

JetStar Japan at new premium

airline in Asia not called

Qantas, what happens to Qantas, what happens to the

travelling public in auts

Australia on your exist ck

domestic fleet would have a

reasonably high average age. If

you combine JetStar and Qantas

together you get 8.6. What happens if you take JetStar out

of that equation, what's of that equation, what's the average age out of the fleet

that the travelling public that the travelling public who

know and love Qantas travel

on? I'd have to take notice on

that but can I say again,

coming back to what we were

saying, the vast majority of the money that we're spending

is on the Qantas fleet is on the Qantas fleet and you're absolutely right on one

thing. I'd love to be able to

replace and move all of the

aircraft as soon as we can. We are in the position where we are in the are in the position, Senator,

that we have to be able to form the capital expenditure that

we're using and at the moment

we're not making enough profits

to fund what we're spending on

aircraft for the group and the

main reason for that main reason for that is due to

the performance of Qantas

international. We're spending

$2.5 billion this year, $2.8

billion next year, we're one of

the largest expebd churs of the largest expebd churs of air craft than any craft than any other craft than any other airline in

the world apart from the world apart from the Middle

Eastern carriers. We've got the

second largest order of 787s.

Now we cannot be able to fund

them we will not be - we will

not be able to replace the

fleet. We have to be able to,

like any business, able to pace

its capital expenditure with its income. Can I clarify,

Senator, the one new aircraft

this year is incorrect. Qantas this year is incorrect. Qantas

has taken 7 new 737s so far

this year and has another 2

that are arriving this year and

another 16 in the next two year

and half of those aircraft are replacement for the older

aircraft. On that, Mr aircraft. On that, Mr Joyce, sorry, Senator Gallagher, and

is there someone behind you who

could answer Senator

Gallagher's question on the average age of the Qantas average age of the Qantas domestic feet. I'll domestic feet. I'll check. We're getting We're getting it. Senator

Gallagher. I want to know now

to the really unbelievable, I

think, was your also assertion

on the 29th of October, I'd

been told by people that Qantas booked 2,000 hotel booked 2,000 hotel rooms in Los Angeles, Angeles, 800 hotel Angeles, 800 hotel rooms in

Singapore and engaged couriers

to get out the 20 or 30,000

letters to employees' homes

prior to your decision that you

made endorsed later Onoda the

Saturday by the board. Well I

can say, Senator, there's a can say, Senator, there's a lot

of conspiracy theories about a

lot of factors around this. Let's get yes or

this. Let's get yes or no. Let's get them. no. Let's get them. There was

no more hotels. We book hotel

rooms all the time. We book

hotel rooms because an airline

of our size has disruptions. There was no more hotel rooms

booked before this than would have normally been booked on a standard operation. I can categorically say that. I have

to say for every fact that

comes up as a conspiracy theory I can put another one on I can put another one on the table. My public relations

department, which you'd think I

would have wanted to be in Sydney when all of this took place 3 of them were at place 3 of them were at the

races in Melbourne on the races in Melbourne on the day at this, got trapped in

Melbourne, had to buy Virgin

tickets to get back. That's

woeful planning if we'd - Could

call it an alibi. Come on,

call it an alibi. Come on,

Senator. There was absolutely,

I categorically can say I made the decision on Saturday and

there was no - and we do

planning, I'll be honest,

Senator, go back, we had looked

at a lockout as an alternative

for a long time and we had

planning documents looking at

how we would do a lockout ,

what it would what it would take and that's why we came to the decision

that once we made the lockout we

we had to ground the airline immediately because we had done

that planning, we had done the

risk assessment and when we did

the risk assessment we knew it.

There was nothing wrong for big business planning for these

inction. We should be planning

for every scenario. We had a

lot more scenarios we were

looking at but there was

nothing of it actions until we

made the decision. Can I put

one question on notice and I

will go to a matter you just referred to, can you referred to, can you provide to

this inquiry the this inquiry the instruction

order, whatever you may call

it, to courier, to every one of

your employee s the notice so

as we could once and for all

put these conspiracy put these conspiracy theories

to rest that that order or

whatever you did with TNT or

whoever it was, was clearly

after the decision you made.

And the second - and I will And the second - and I will give you that on notice. The second question you've referred

to plans for a lockout. Can you

tell this committee who you

briefed and how early did you brief political, business, shareholders or anybody on your

plans? Well let me generally because I know again there's a

lot of commentary about who was briefed when and briefed when and what happened.

We've met with a whole series

of ministers, shadow of ministers, shadow ministers,

we've met with States, we've

met with a whole range of

different people over a period

of time and in those meetings

we were consistent in what we

were saying. We were describing

in very detailed the problems that Qantas was facing. We

absolutely were telling people

about the forward bookings, the

commercial damage, the

financial damage, we were

telling people about the operational issues that this

was causing us, we were telling people about the safety

concerns we had. I got a note

from CASA saying that they were keeping keeping us under close monitoring because industrial

relation s and the factors issues

issues become a concern for

them. So we were explaining to

esh - everybody what was taking place and the place and the rapid

deterioration that was

occurring within the group. We

said very clearly, as part of

that, that we were in the process of grounding aircraft

and said very clearly that

aircraft could be grounded and

the whole fleet could the whole fleet could be

grounded at short notice. At no

stage did I talk to anybody

about lockout. I talked about

the grounding of the the grounding of the fleet and

talking about the grounding of talking about the grounding of the airline as a possibility.

We didn't talk to anybody on

either side of politics about a

lockout. And in that just to

clear up the speculation that

we see in the media and in

other places, in your time other places, in your time that you spent wandering the halls

of parliament as it's been

reported, did you give equal time to all political parties

in those briefings. No, more with the Government than with

the Opposition. Our history

here I was talking to Geoff

Dixon the other day and he said

there was an incident that

occurred in 2006, 2007 and he

took up the phone and rang the

then prime minister Howard and straight after he rang the Opposition

Opposition Leader. So we always

have an approach when

significant issues occur within

the group. We have always taken

that and continued to do it and

that's what we did in the that's what we did in the build

up to this and that's what we

did when on the day when we

were making the calls to

various individuals. There's

been a proposition put to me that in the that in the light of the 71%

decrease in the share decrease in the share value, approximately 71% since 2007,

the absence of a dividend for

two year s in the remarkable

patience, the remarkable vote

of 96% in respect to your

remuneration in light of the deterioration of the market

value of the company, no dividend, that dividend, that actually have

you had any discussions can

anyone, shareholders large or small, about small, about the potential

break up of the company, sell

off the profitable bits and

take it out of the market in a

private equity way? I have private equity way? I have not

and I will say categorically my

belief is that the Qantas group

is strongest if we can keep the group dogt - group dogt - together. That's why we're so worried about this proposed Qantas sale act amendments because amendments because it would

force us to break up the group.

It would force us to sell those

components part off the airline

and would take u us down that path that would leave Qantas exposed. JetStar would have to

go, our adventures in Asia

would have to go. Can I say in

terms of the share price we are terms of the share price we are

in a cyclical industry. We are

in a company that does go with

the cycle and if you look at

airlines around the world

Qantas has out performed them

because Qantas is only the

airline of the world with an investment grade credit rating.

Qantas is the only airline in

the world that had profits

during the global during the global financial crisis consistently now crisis consistently now and going back to '95. going back to '95. We've had

profits and you take the share price of some of the other airlines. Air France is

one-third of what it was a year

ago. Kathay is one half of ago. Kathay is one half of what

it was a year ago. Qantas is

like all other airlines around

the world, our share price is

disappointing but it's a

cyclical business, it's a

business that responds to the

cycle and is a business that gets hit

gets hit by the cycle like

every other airline. You

every other airline. You state in your CEO's address to the

AGM these new Asian airlines

will not cost one single

Australian job, not one. I take

it that's in addition to the

1,000 that you've already

announced to go? There's a

complete separation between the

two. The jobs that we announced that were that were leaving the company

was a consequence of us pulling

back on the UK operations and some changes like the

investment in the new Brisbane

catering centre which is a complete change of work

practice s because it's new technology we're using there. They

They were as a consequence of that. Nothing to do with the

creation of the Asian airline.

The Asian airline is not going

to lose one single to lose one single Australian job. The Asian airline job. The Asian airline is going

to recover our share of the -

of market share into Asia. At

the moment we need to recover the traffic that's gone to Cathay Pacific, Cathay Pacific, Singapore Airlines, it's not travelling

with Qantas today. As you know

we only have 80% market share.

82 of every 100 Australians travel trafl on another airline. We have to recover

that. We need an Asian hub and the whole idea of the Asian

carrier is to give us access to

traffic rights that we do

have to set up a hub in

Singapore at KL to allow us to feed corporate traffic into

range of destinations. Where we provide a network where corporate traffic travels with

us to North America, yurpt, South Africa and South Africa and Australia. I

wants to travel with us but we're not competitive in aiz y with whatteer offering and we need to do something in ord to

do that. That will strengthen

every Qantas job. Amid the

existing Qantases in Asia existing Qantases in Asia we'll have more repeat business have more repeat business on it. The existing services of

Qantas into Asia will get stronger and my belief stronger and my belief is

allows us to start growing the

Qantas brand

We'll say goodbye to

viewers on ABC 1 viewers on ABC 1 but to continue watching you continue watching you can continue on ABC News 24. Have a good weekend.

spending. We're spending $2.8

billion next year. We are massively investing in the our cash flow

at the moment is $1.7 at the moment is $1.7 billion.

We're spending $2.5. That means We're spending $2.5. That means we're borrowing the rest. That

means that like the equivalent

of an individual having a mortgage that their income is

not covering. That's where we

are. We have a gap of over $700

million unable to pay for the