Alan Joyce, now ex- Qantas Airways (ASX:QAN) Ltd CEO, has been the centrepiece of the news in the last few weeks with the ACCC taking action against the flying kangaroo, but little has been said about the long-suffering shareholders and when the share price will rise.
You have to wonder why Alan Joyce sold most of his shares in June knowing that the Board was going to announce a very healthy profit of 1.7 billion after tax. He would have also known about the ACCC investigation. You can’t help but raise an eyebrow and shake your head with a hint of scepticism.
Joyce was at Qantas for 20 years and became CEO in 2008 during the middle of the GFC. If you held Qantas shares since January 2008, your capital would have grown 111% over 15 years or in rough figures around 8% per year. If you bought just prior to the GFC, then over the last 16 years, your capital would have grown just over 2%. Right now, the stock is down over 12% with most of the fall occurring in the last month or so.
Is Qantas worse off since listing?
The question everyone should be asking is whether Australia’s airline is better or worse off than it was 20 years ago, bearing in mind that it was run by the government before it was listed on the exchange in 1995. In my opinion, I dare say it is the latter.
Like so many large corporations, the reason it is worse off is because it is driven by the big shareholders, like the institutions, who focus on making a profit from trading the stock rather than protecting and growing a legacy. This short-term thinking is about cost-cutting and making huge profits knowing that if they get into trouble, the government will bail them out like they did during the pandemic.
This American style of double-digit growth at all costs has filtered into our market over the past few decades, which does not inspire loyalty to a brand or show that a company is a good corporate citizen.
It also creates large swings in the share price, which is often to the detriment of the ordinary shareholders who generally invest in companies they believe in long term.
Dale Gillham is Chief Analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au