Qantas boss Alan Joyce is spot on when he says the $252 million loss reported by the battered icon is ''unacceptable'' and ''unsustainable''. Shareholders think so too, with the share price plunging after the company released its results.
As for the 22,000 members of its full-time workforce who are now staring down the barrel of 5000 job losses and wage freezes, there is a lot of raw emotion that could easily burst into industrial disruptions.
The problem is that Joyce is yet to outline all the details of a strategic review, as was expected on Thursday. Will its frequent flyer business be floated? What other assets might be sold besides the terminals? And how will unions and the Abbott government react?
The pilots' association issued a media release with strong words: ''Qantas management has today outlined a demolition job, but failed to follow through with a strategy for how it will grow the business and serve the national interest.''
The Abbott government is yet to announce its plans, despite the Qantas share price jumping late last year amid speculation that it was looking at changing the Qantas Sale Act and providing a government-backed guarantee to the airline to borrow debt more cheaply using the government's AAA credit rating.
The government was waiting to see Joyce's plans to ''modernise'' workplace practices and how it planned to get out of its hole. But it seems Prime Minister Tony Abbott might now be going cold on the debt guarantee which, if given, would have a negative effect on Virgin and regional airline Regional Express. In Parliament on Thursday, Abbott said ''what we do for one business, in fairness, we have to make available to all businesses''.
No doubt Qantas faces many challenges, but what's new? Former chief executive Geoff Dixon famously coined the phrase ''constant shock syndrome'' to describe the airline and its battles, including severe acute respiratory syndrome, or SARS, the Asian crisis, fuel price explosions, the World Trade Centre terrorist attack and the rise of low cost carriers.
But the problem is that Joyce - and the board - seem to blame everything but the company for the mess it is in. And many of the problems are self inflicted. The blame game includes intense competitor capacity from international airlines, record fuel prices, a ''distortion'' in the domestic market due to the emergence of Virgin Australia and high labour costs.
The $252 million loss has long been anticipated, as has the size of the cost cutting. What we now know is how the company plans to reduce its fleet and aircraft types, cut capital expenditure, reconfigure the business for efficiency and stop growing its Jetstar Asian business. It raises the question why some of these things hadn't been thought of before it got to this.
To put it into perspective, the Jetstar Group reported a loss of $16 million for the six months to December 31, compared with a profit in the previous corresponding period of $128 million. Jetstar's domestic business makes a profit, which suggests the rest has been a big drain on the group. A sensible strategy might have been to curb spending in its Jetstar Asian operations much earlier.
But the root of the problem is overcapacity and Qantas is a big part of that problem. It has been flinging more and more capacity at the domestic market to maintain its 65 per cent line-in-the-sand market share against rival Virgin Australia. In its announcement on Thursday, it said it will continue to lift capacity in the domestic market from 1.4 per cent in the first half to between 3 and 4 per cent in the second half of the financial year despite yields and revenue falling.
This kind of consultant-type thinking on market share while the business goes to the dogs goes a long way to explaining why the domestic Qantas business shrank in profits from $218 million in the first half of 2013 to $57 million in the first half of 2014. If he stopped putting capacity onto the market, profits would rise - and rise fast.
Joyce talks long and hard about an unfair playing field and cites Virgin's three big foreign-backed shareholders who recently injected hundreds of millions of dollars in equity. He says he doesn't want people to think Qantas has done nothing while the world has changed. That may be so, but he needed to do much more and stop the capacity war.