IN BRIEF: July 2020 issue

QANTAS rips off the bandaid

QANTAS rips off the bandaid

Hearts sank across the industry late last month when Qantas announced it would ground its international fleet for as long as 12 months, bringing into sharp relief the brutal impact that COVID-19 is having and dashing hopes of a recovery any time soon.

Acknowledging the harsh reality of ongoing border closures across the globe, QF CEO Alan Joyce also confirmed the airline will end up significantly different from before the pandemic hit, with 6,000 jobs to go on top of 15,000 staff who will continue to be stood down until demand returns. The increasing Qantas share price also made it more palatable to raise $1.9 billion in additional capital which will help position the airline for growth once things improve. But in the meantime “we need to position ourselves for several years where revenue will be much lower, and that means becoming a smaller airline in the short term,” Joyce said.

The downsizing of Qantas must be a bitter pill for him to swallow, given that some of the airline’s rivals have quickly stepped into the breach — most notably Qatar Airways which has become Australia’s largest international carrier through the pandemic, with an estimated 45% market share. However that’s definitely come at a price, with load factors at record lows — and clearly that’s a price Qantas does not want to pay.

Musical TTC chairs

The Travel Corporation is also set to look different once COVID-19 passes — particularly when it comes to its executive ranks. Last month the company announced that Katrina Barry, the longstanding MD of Contiki in Australia and NZ, would move across to lead the Trafalgar and Costsaver brands when she returns from maternity leave next month.

She replaces Jason Wolff, who has been in the job since early 2019 but is now relocating to Brisbane to return to a role outside the travel industry. When he was appointed to Trafalgar last year, he took over from Matt Cameron-Smith who moved to lead The Travel Corporation’s AAT Kings brand, where he was further promoted in just May this year to a CEO role.

However Cameron-Smith has in turn now resigned to become head of Voyages Indigenous Tourism Australia, with The Travel Corporation Chairman Dave Hoskings on the hunt for a replacement at AAT Kngs and also working on new leadership for Contiki, to replace Barry.

Contiki is expected to see some sort of a restructure in consultation with former Silversea MD Adam Armstrong, who has now taken up his new role as global CEO of the youth brand — but operating from Sydney rather than Geneva due to COVID-19 travel restrictions.

House of Travel receives investment

New Zealand’s House of Travel — the parent company of TravelManagers, Hoot Holidays and Orbit World Travel — has shored up its financial position with a funding injection from two of the country’s wealthiest families.

Founder Chris Paulsen said the investments from Sinclair Investment Group and Tailorspace would allow the company to strengthen its balance sheet and to then “take advantage of the significant opportunities that will arise once conditions normalise”.

He remains the majority shareholder in House of Travel, and said the new equity would also not change the existing partnership arrangements with the group’s NZ owner-operated retail travel agency outlets or its Australian businesses.

Bain wins Virgin bid

Virgin Australia looks one step closer to returning to the skies, after the airline’s Voluntary Administrators finalised a Sale and Implementation Deed with Bain Capital. The agreement, which is still subject to approval by creditors owed more than $7 billion, initially envisions an all-domestic operation with 60-70 aircraft, with the later introduction of short-haul international.

If the deal is approved Virgin 2.0 is likely to relaunch in October — and will have one eye to a potential new competitor in the form of Regional Express which has opportunistically announced plans for its own jet operations on the “golden triangle” between Australia’s east coast capital cities.

Fly365 directors solicit creditors

The former directors of the collapsed online travel agency believe they have an opportunity to sell the Fly365 “assets and the brand” to an unnamed third party, and have been seeking the support of some of the hundreds of travellers who lost money when the company ceased trading earlier this year.

Despite facing a formal Public Examination in the NSW Supreme Court next month — as part of investigations funded by some of the major creditors — Scott Mayne and Mustafa Filizkok have been emailing individual customers with a proxy form for a possible Scheme of Arrangement for the company. Aston Chace, the Fly365 Administrators, have urged creditors to consider the proposal carefully, noting their report, which found $5.5 million was transferred out of the company in its dying days.

HLO drops Norwegian

Norwegian Cruise Line has not publicly commented on a vitriolic attack from Helloworld Travel CEO Andrew Burnes, amid confirmation that HLO’s Seven Oceans wholesale cruise brand has been withholding payments from multiple cruise lines.

Burnes wrote to travel agency members of Helloworld’s various networks in early June, noting that Norwegian is no longer a preferred supplier to the group and making “no excuses for our hard-line stance” in the face of claimed insistence by NCL on payment for “cruises that we all know are not going”.

Apart from Burnes’ letter, Helloworld has also declined to comment. However in contrast to the HLO experience, agents from other groups have hailed the COVID-19 response from Norwegian, including Travel Associates’ Kathy Pavlidis who noted “every cent owing has been paid back, on every cruise, and they’ve protected our commission too”.


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