Here are the challenges facing incoming Qantas CEO Vanessa Hudson

By Angus Whitley

Vanessa Hudson has just won one of the highest-profile jobs in Australia — chief executive officer of iconic airline Qantas Airways Ltd.  
 

The 28-year company veteran replaces Alan Joyce, who will step down in November after 15 years in the role — one of the global aviation industry’s longest tenures. While Joyce is famed for turning around the airline at least twice — recently posting a record A$1 billion ($663 million) first-half profit — he leaves a divisive legacy and an expensive future for Hudson.   

Here are five of the top tasks facing the first woman to lead the 103-year-old airline:

Paying for Planes

Some of Qantas’ workhorse Boeing Co. 737 jets have shuttled short hops like Sydney-Melbourne for more than 20 years and are showing their age. Joyce’s biggest departing gift to Hudson is the multi-billion dollar bill to upgrade the fleet. Following a deal he struck in 2021, Qantas can tap about 300 new Airbus SE jets as part of Australia’s largest-ever plane order. The airline is due to receive a new aircraft every three weeks for the next three years. Yet delivery costs will drive annual capital expenditure to a record A$3.36 billion by 2025, analysts estimate. The expense will eat into earnings and whatever might be left for shareholders.

Repairing Ties

Hudson will take the helm as relations with unions and passengers plumb an all-time low. The soured ties go back to at least 2011, when Joyce grounded the entire Qantas fleet to settle a labor dispute and stranded about 70,000 customers around the world. Employee representatives later accused Joyce of using the Covid-19 pandemic to get rid of some of the highest-paid cabin crew, and a court ruled that Qantas sacked more than 1,000 ground workers illegally. When air-travel demand surged back, Joyce become a lightning rod for passengers angered by a flurry of cancellations, delays and lost bags. His Sydney home was pelted with eggs and his surname became a byword on social media for air-travel disruptions.

Non-Stop to New York

Hudson faces the unprecedented task of rolling out non-stop flights linking Sydney with London and New York in late 2025, the world’s longest direct commercial services. Joyce might have stayed on to join the first 20-hour trips had Covid not delayed the planned launch. Instead, his successor must somehow make money from the landmark project, conceived under Joyce at least six years ago and cemented last year when he ordered customized long-range Airbus A350s. The cost of those 12 jets is estimated at more than A$3 billion.

Healthy Rivalry

Three years ago, the pandemic triggered the almost immediate collapse of Qantas’ main domestic rival, Virgin Australia, then-laden with debt. In the aftermath, Qantas piled into the void left by Virgin. Australia’s largest airline saw its market share in Australia touch 74%. 

But Virgin Australia is back. Now owned by buyout firm Bain Capital, unburdened by borrowings, and run by ex-Qantas executive Jayne Hrdlicka, the smaller carrier is making money and is considering an IPO as soon as this year. The combined domestic market share of Qantas and Jetstar has dipped to 62%, and Virgin carries more passengers on the busiest routes between Australia’s major cities. For the first time in more than a decade, Qantas faces a primary competitor that’s profitable, low on costs and light on debt.

Going Green

Joyce has bet big on ultra-long haul services, the most-polluting flights of all. The task of cleaning up after them will start with Hudson. Like many companies across the aviation industry, Qantas plans to reach net zero emissions by 2050. While sustainable aviation fuel offers an immediate way to decarbonize flying, the kerosene alternative remains expensive and in limited supply. Compounding the challenge for Hudson, there’s no major provider of SAF in Australia, despite Joyce’s repeated pleas for the government to kickstart domestic production.