Bags me the first class flight
Nothing appals Mrs M more than the thought of a premium cabin without
Krug
Financial Times
Jan 13, 2007. P. 8
Commercial air travel can be tedious. The Moneypenny family travelled
to Australia over the Christmas holidays, courtesy of an airline with a
kangaroo on its tail. Mr M went first, accompanied by the three cost
centres, reflecting the facts that (a) he can take more holiday than me
and (b) it is his country, so he wants to spend longer there. From one
perspective, Australia is the most fabulous holiday destination on
earth. From another, it is a woefully underpopulated country where it
is almost impossible to make any serious money. A group of people
hoping that the former view will help them to disprove the latter is
the team taking the kangaroo airline private in an A$ 12bn deal. That
sounds big until you convert it to UK Pounds .
I drove the Moneypenny team to their appointment with the pre-
Christmas Heathrow chaos. They checked in six pieces of luggage; a
suitcase each, a bag of revision for Cost Centre #1's AS levels, and Mr
M's golf clubs. Only one piece arrived. The golf clubs.
>From one perspective, Mr M's, this showed that the baggage handlers had
their priorities right. From another, namely mine, 12,000 miles away,
it was a massive inconvenience. This was because Mr M, faced with the
prospect of playing golf in the clothes he flew out in, took the type
of resourceful action that he always does in a crisis - he called me.
Several telephone calls by me later (to BAA, British Airways and then
American Express, our insurers), I was able to tell Mr M that he could
go out and spend A$ 6,000 on clothes. That is big even when you convert
it to UKPounds .
Cost Centre #1 thought that Santa Claus had arrived a few days early.
Not only had any danger of exam revision been removed by the loss of
his schoolwork bag, but he was also given carte blanche to go out and
spend money on clothes. Mr M, on the other hand, dislikes shopping for
clothes with children, and so between them they managed a paltry
ADollars 2,400.
I flew to Sydney a few days later. This caused some comment, because
although I flew on the same airline, I flew first class - the earlier
party had been made to travel at the back of the aeroplane. I make no
apologies for this. Children, in my opinion, should not be allowed to
travel anything other than economy, unless they can pay for it
themselves. Small children make a noise and annoy me - if you can
afford to fly your children at the front of the plane, you can afford
to pay for someone to travel with them at the back of the plane. Larger
children, on the other hand, are being ruined by their parents'
largesse. A whole generation is growing up with no appreciation of the
value of money because, among other things, their parents are flying
them round the world in first and business class.
Presumably the key people taking Qantas private are hoping to make
enough money to fly themselves and their children first class, or even
better, by private jet, for ever. But I just don't get it. The deal
will be leveraged to the hilt in the usual manner of these things.
Where are they going to get the improvement in performance needed to
pay it all back? What will they sell? And to whom? And whatever they
do, surely it won't be anything that a competent and properly
incentivised management team couldn't have done under public ownership?
They are even keeping the same CEO, Geoff Dixon - couldn't he have
managed whatever rabbit he is going to pull out of whichever hat as a
public company? Margaret Jackson, Qantas's chairman, and her board,
have missed a trick, in my opinion. They will pass into the history
books as having got the offer increased from A$ 5.50 to ADollars 5.60
(which, in any currency, is an increase of less than 2 per cent) rather
than seizing the opportunity to become the heroes of the institutional
investor community. Qantas will be refloated or sold in a few years and
a small number of investors will make a large amount of money. Had the
board delivered the same performance improvement under public ownership
many more people would have been able to share in the gains.
Despite the leaf tea served in Qantas first class (what a pain for the
cabin crew to wash up) they don't offer Krug, an omission that I hope
will be addressed once the new owners of the airline take possession.
Not least because a non-executive director of Allco Finance Group,
which will be the largest shareholder, is Sir Rod Eddington, who has
previously run both Cathay Pacific and British Airways, both of which
serve Krug in first class. They also have far nicer pillowcases.
Sir Rod is also a non-executive of News Corporation. Here he has Rupert
Murdoch as chairman. Mr Murdoch famously used to travel between New
York and London by commercial airline, in the days when Concorde was
still in service. He did, of course, have access to a private jet, but
it wasn't supersonic so took longer. Instead it crossed the Atlantic,
carrying his luggage. Which would certainly have ensured that it all
arrived.
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