Qantas CEO's flight onboard A380 caps crisis management

Qantas Airways Ltd Chief Executive Officer Alan Joyce will be onboard tomorrow as the carrier flies its first Airbus SAS A380 service since a mid-air engine explosion. That commitment helped persuade Mark Ritson to push ahead with a similar trip.

“I couldn’t be more confident,” said Ritson, a University of Melbourne professor, who is flying to London with his wife on November 29. “I think it will be a safer plane than before.”

Joyce’s flight follows the five press briefings and at least six radio and television interviews he has given since grounding his six A380s hours after the November 4 engine blowup. The swift action and public appearances have helped Sydney-based Qantas retain travelers’ confidence, said Robert Heath, who has consulted on crisis management for more than 20 years.

“It is a textbook example of how to handle the situation,” said Heath, an associate professor at the University of South Australia in Adelaide. “When you have a crisis, you have to give a measured response and make sure you are prepared like he was.”

Joyce, 44, who became CEO about two years ago, announced the withdrawal of the superjumbos in a televised press conference after an A380 made an emergency landing in Singapore. The Rolls-Royce Group Plc-powered aircraft touched down with the rear of an engine cover blown away and damage to a wing and its fuselage. No one onboard was hurt.

New A380s
The carrier, which has never had a fatal jet crash, will resume flights with only one of its 450-seat planes. Another will follow next week. Two new A380s will also enter service within the next month. The airline is working with Rolls-Royce on modifying as many as 16 powerplants following inspections prompted by the engine blow-up.

Qantas “will not fly any individual aircraft unless we are completely sure that it is safe to do so,” Joyce said in an e- mail sent to members of the carrier’s roughly 7-million strong frequent flyer program. Joyce, who has also talked about the planes on Youtube, wasn’t available for an interview, spokesman Simon Rushton said.

The carrier has used substitute planes, including Boeing Co 747s, to maintain services usually flown by the A380s, which represent 17 per cent of its international capacity.

The disruptions may have cost Qantas A$60 million ($59 million) in lost sales and costs such as chartering planes, most of which it will likely be able to recoup from Rolls-Royce, UBS AG analyst Simon Mitchell said in a November 23 note to clients. Joyce said the same day it was “too early” to say whether the airline will seek compensation from the engine-maker or how much. Rolls-Royce officials in London didn’t respond to calls seeking comment.

Highest ratings
Mitchell affirmed a buy rating on Qantas, a recommendation made by 13 of the 14 analysts tracked by Bloomberg. The carrier’s average analyst rating trails only Rio Tinto Group among Australia’s 100 biggest companies by market value.

“Getting his backside on the plane is exactly the right thing” for Joyce to do, said Ritson, a marketing professor who works for clients including LVMH Moet Hennessy Louis Vuitton SA and Adidas AG. “From the start Joyce was on top of it.”

Joyce’s high profile contrasts with Toyota Motor Corp President Akio Toyoda’s handling of US recalls that began last year. Toyoda didn’t hold a press conference after the company announced defects with 3.8 million vehicles in September, 2009 and then waited more than a week to give a briefing after a separate recall covering 2.3 million cars in January. US sales chief Jim Lentz and Executive Vice President Shinichi Sasaki instead spoke for the company.

Toyoda’s absence
Toyoda’s absence hurt Toyota because the company wasn’t seen to be addressing the issues, said Ritson. The Toyota brand’s share of US auto sales fell to 13 per cent in the first 10 months of this year from 15 per cent a year earlier.

“Toyoda really should have been out in front from the beginning,” said Tadashi Usui, a Tokyo-based analyst at Moody’s Japan KK. “In any crisis the unfolding can change dramatically depending on how it’s dealt with at the outset.”

Joyce’s appearances haven’t prevented Qantas from falling 7 per cent since November 3 in Sydney trading, compared with a 2.7 per cent decline for the benchmark S&P/ASX 200 index. A Boeing 747 operated by Qantas also returned to Singapore a day after the A380 blowout because of an engine fire. At least two other Qantas planes have also turned back since then because of faults.

“I’m pretty impressed with how they have handled it but that only goes so far,” said Ronald Bishop, senior lecturer in aviation at Central Queensland University, who was a US Air Force engineer for more than 20 years.