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It is a very pertinent nexus. The gaps in Corporate Governance have grown. It was a decade or so ago that the Sarbanes-Oxley Act, in the USA arose from extreme examples of what Australia is witnessing in a self regulated banking model: Back self interest every time. Lack of regulation has done nothing. The new ASIC Chair inherits a mess, ASIC’s prosecution mix is low risk, mostly civil and obvious is the lack of any action against what would be classed as enviable opposition. Low risk and look the other way. Mr Shipton’s pedigree no better than the former, another insider, this time of Goldman Sachs no less. In the UK and the USA the Company code now requires the Executive remuneration to be referenced to the average wage level in the firm. One can appreciate the ‘business type lobby groups’ are donating furiously to ensure such reference is not a statutory requirement in Australia.

By any measure, Qantas executive management have been focused internally on a war with the staff and short term sugar hits to performance that share buy backs are known for. They have been enboldened by short term incentives and lack of regulatory oversight. That ASIC never blinked when a ‘terminal’ Qantas was ‘transformed’ and executives reaped rivers of well timed Option bonuses is testament that the regulator has no appetite for investigation.

In the intervening period, other airlines with strategic management a focus and not self embellishment have re-equipped with fuel efficient twin engine Long range aircraft. Doing so,lowers the CASK and and preserves operating margin for when fuel gets more expensive or demand (and consequently yield) falls.

The performance measures for each of the 2015–2017 LTIP (tested at 30 June 2017), 2016–2018 LTIP (to be tested as at 30 June 2018) and 2017–2019 LTIP (to be tested as at 30 June 2019) are: —The relative TSR of Qantas compared to companies with ordinary shares included in the ASX100 —The relative TSR of Qantas compared to Global Listed Airlines These Rights will only vest in full if Qantas’ TSR performance ranks at or above the 75th percentile compared to both the ASX100 and the Global Listed Airlines peer groups. At the end of the performance period, the TSR performance of Qantas and each comparator company will be determined based on the average closing shares price over the final 6 months of the performance period. Qantas’ Financial Framework also targets top quartile TSR performance relative to ASX100 companies and global airline peers and therefore relative TSR performance against these peer groups has been chosen as the performance measure for the LTIP. The peer groups selected provide a comparison of relative shareholder returns relevant to most Qantas investors: —The ASX100 peer group was chosen for relevance to investors with a primary interest in the equity market for major Australian listed companies, of which Qantas is one —The Global Listed Airlines peer group was chosen for relevance to investors, including investors based outside Australia, whose focus is on the aviation industry sector and measuring returns from listed companies impacted by comparable external factors

Up to 50% of the total number of Rights granted may vest based on the relative TSR performance of Qantas in comparison to the ASX100 and up to 50% of the total number of Rights granted may vest based on the relative TSR performance of Qantas in comparison to the Global Listed Airlines peer group. The vesting scale for both the ASX100 and the Global Listed Airlines peer groups is as follows: Qantas TSR Performance Relative to Each Peer Group Vesting Scale Below 50th percentile Nil vesting Between 50th and 75th percentile Linear scale: 50% to 99% vesting At or above 75th percentile 100% vesting The ASX100 peer group comprises those companies that make up the S&P/ASX100 Index at the commencement of the performance period. The Global Listed Airlines peer group has been selected with regard to its representation of Qantas’ key markets, full-service and value-based airlines and the level of government involvement. For the 2015–2017 LTIP, the Global Listed Airlines peer group includes: Air Asia, Air France/KLM, Air New Zealand, All Nippon Airways, International Consolidated Airlines Group, Cathay Pacific, Delta Airlines, easyJet, Japan Airlines, LATAM Airlines Group, Deutsche Lufthansa, Ryanair, Singapore Airlines, Southwest Airlines, Tiger Airways and Virgin Australia. The 2016– 2018 LTIP and 2017–2019 LTIP also include American Airlines and United Continental. Tiger Airways was excluded from the 2017–2019 LTIP

Mr Buchanan desperately tried to avoid expansion into long haul low fare as most of the purported advantages of Low Far Airlines were readily eroded. It is known that he personally stated numerous times that no way would JQ International ever be able to achieve unit cost needed for such a low yield business. The transfer of the original 14 788 (which became 11) was part of his last effort to eradicate the unit cost over run. When he demonstrated his concern to the lightweight board, his tenure was subsequently short lived: Little Napoleon does not tolerate insolence.

Presently it is impossible to see how poorly JQ International do. Despite having more aircraft than the Qantas segment, management do not dis-aggregate into Domestic and International. Something Qantas management did in 2012 to show how ‘poorly’ Qantas International was faring.

For all their efforts, it is obvious: JQ "group" generate 22% of the Revenue of Qantas. No ‘unit cost advantage’ that we ever have observed would cover that gap. Fortunately Qantas domestic has sufficient dominance to stem the losses. Simple factor productivty like this indicates that JQ is likely overscale (has grown too big) To those who suggest that this is anti JQ, it isn’t. It is however a critique of the lengths to which Little Napoleon will go to ensure the ‘myth’ of his airline acumen is maintained.