For James Xenidis, Australia's Qantas Airways isn't as good as it used to be.
''We now have to factor a late arrival in when scheduling meetings because it happens so often,'' said Xenidis, 41, a lawyer at Inspector Compliance Pty in Melbourne who flies three times a week. ''When we need to be at a meeting in the morning we often have to fly the night before to make sure we can make it.''
For Alan Joyce, who takes over as Qantas chief executive officer today, the 23% of flights that fail to arrive on time are just one of the challenges. Qantas's shares have fallen 57% since January 1; Moody's Investors Service said this week that it may cut the airline's ratings; and the carrier's safety record has been hit by incidents including a mid-air plunge and an in-flight oxygen tank explosion.
''It's an extraordinarily difficult job to take on at Qantas,'' said Saxon Nicholls, who manages more than $600 million of equities at Herschel Asset Management Ltd. in Melbourne. ''We are in a slowing economy and it is difficult to turn around perceptions when the business itself is so challenging to run.''
Joyce, who takes over from 69-year old Geoff Dixon, won the top job after turning Qantas's budget carrier, Jetstar, into the airline's fastest-growing unit, partly by targeting the carrier's less profitable routes with more fuel efficient aircraft and lower labor costs.
The 42-year-old Irishman, who holds degrees in Management Science and mathematics from Trinity College at the University of Dublin, says he's up to his latest role.
''In mathematics and physics it's all about problem solving,'' Joyce said yesterday in an interview at the 89-year- old company's Sydney headquarters. ''That is the way I approach things.''
Industry slowdown
Qantas faces one of the toughest environments for travel in years. The airline industry is expected to report combined worldwide losses of about $US5.2 billion ($8 billion) this year, the widest since 2004, according to the International Air Transport Association, or IATA.
As many as 28 airlines have gone out of business and a further 20 are at risk, according to IATA CEO Giovanni Bisignani.
Aside from the task of running an airline amid the global economic crisis, the perception that the airline is either unsafe or chronically late must be tackled head-on, Joyce said.
Qantas, known as the Flying Kangaroo for its red and white tail logo, is renowned for its safety record. The carrier hasn't had a fatal crash in the jet age, a milestone made famous in the 1988 movie ''Rain Man.''
All the same, the airline has been beset by a series of incidents this year. In a survey published October 7, 63% of Australians polled said they thought the airline's safety standards ``have become worse over the last few years.''
No. 1 priority
''Safety is our number one priority and we spend a significant amount of resources, human and financial, on safety and maintaining that reputation,'' he said. ''That is the key communication challenge we have.''
Sticking to a schedule also remains an issue - particularly for investors who say the airline risks alienating customers. Qantas shares closed yesterday at $2.35 after reaching a 10-year low last week, less than half the $5.45 offered in a failed $11.1 billion cash buyout in 2007. They recently traded down 3 cents for the day, or 1.3%, at $2.32.
Almost 23% of Qantas planes failed to arrive on time in September, making it the worst performer among the nation's eight carriers, according to the latest government data.
Joyce says the airline could, and has, been doing a better job of getting flights to arrive on time. As the company works through labor actions earlier this year, the record has been improving -- and will get better, he promised.
On-time performance
The airline's on-time performance is now above 80% and will get better following this week's decision to ground some aircraft, which Joyce says will allow the carrier to turn planes around faster.
''Certainly we did have a problem with on-time performance and people's perceptions of that, which came from industrial relations disputes we had with the engineers,'' said Joyce.
Joyce grew up in the industrial Dublin suburb of Tallaght. He worked for an Irish computer company before joining Irish carrier Aer Lingus. He joined Qantas in 2003, a year before a loss of market share to Virgin Blue Holdings Ltd. prompted Qantas to introduce discount carrier Jetstar.
While at Jetstar, Joyce cut expenses by selling snacks and beverages, rather than giving them away, and charging for extra leg room and inflight video entertainment.
Since taking off in May 2004, Jetstar has built a fleet of 34 planes. It represented almost 10% of Qantas' profit of $969.7 million last year.
Pragmatism
''He's a very pragmatic guy,'' said Chong Phit Lian, the chief executive officer of Singapore-based Jetstar Asia. ``His experience and background with Qantas and Jetstar should help him steer the company in this current environment.''
The carrier this week said it will cut capacity by the equivalent of 10 aircraft and forecast a 64% drop in pretax profit to about $500 million. Joyce may go further in removing more capacity should the need arise.
''We are acting very fast and being aggressive,'' Joyce said. ''Circumstances and the environment are tough but we are acting very fast and there are a lot of advantages we have.''
Back in Melbourne at Inspector Compliance, Joyce's actions may yet prove enough to retain the loyalty of James Xenidis.
''My preference is always Qantas because their service is superior, even with the bad press they've been getting,'' the financial services lawyer says. ''The mishaps don't help, but every airline seems to have mishaps.''
Bloomberg
