Lessons from Qantas


10th March, 2020

3 leadership lessons to take from Qantas’s reaction to COVID-19

The measures Qantas has taken to control the potential damage coronavirus may cause reveals important lessons for founders and business managers on how to lead in times of sudden change.

Among the many industries that have been negatively impacted by the ongoing spread of COVID-19, airlines are continuing to suffer from the sudden drop in travel demand.

Flights are being cancelled, staff are being laid off and revenues are nosediving, causing some of the world’s largest airline carriers to announce major changes to their services.

Qantas is one such example of an airline that has been negatively impacted and, earlier this week, the Spirit of Australia announced that it would be taking a number of unprecedented steps in a bid to limit damage to the business and avoid going into all-out free fall.

In particular, there are three things the airline outlined that will offer business owners with some food for thought on how they might react in the event that adversity hits their own ventures.

1. The importance of a ‘rainy day’ fund

In a press release describing the changes the group would be taking in the wake of the virus, Qantas announced it would suspend almost a quarter of all flights globally until later this year.

For many businesses, dropping almost quarter of its revenue places a tremendous strain on cash flow, making it very difficult to continue to operate.

But when commenting on the virus’s impact on financial performance, the airline stated that it was in ‘a strong position’ with a ‘robust balance sheet’ and between its cash, undrawn facilities and unencumbered assets, the group could dip into almost $8 billion if necessary.

Qantas’s strong financial position teaches startup founders about the importance of securing a rainy day fund for circumstances that can’t be planned for.

READ: Shoes of Prey collapse – lessons for startups and small business owners

When business is going well, it’s easy to forget that things can turn sour in the quickest of instances. But, founders who are looking to build businesses that withstand the tests that dire change can present always need to set aside a portion of their earnings so they have a safety net to fall back on.

2. Always put your staff first

When a significant drop in revenue occurs, businesses look to cut back on as many costs as they can, and given the current circumstances, Qantas announced that it will be doing exactly that.

But even though the announced service changes mean the company will have in the order of 2000 surplus jobs, Qantas chief executive Alan Joyce said laying off staff was a last resort.

“Less flying means less work for our people,” Joyce said in his commentary on the group’s press release. “But we know coronavirus will pass and we want to avoid job losses wherever possible.

“We’re asking our people to use their paid leave and, if they can, consider taking some unpaid leave given we’re flying a lot less.”

This approach is an important one for startup founders to take note of. Staff aren’t just resources that can be laid off – they are people who often rely on their income for their livelihood.

No matter how dire things might become, it’s important to always put your staff first and show them the empathy they deserve, as this will bolster goodwill and support for your company when it’s needed most.

READ: Offering your staff the right types of benefits

3. Sacrifice is part of running a business

As part of its overall attempt to cut back on costs in wake of this predicament, there are several senior members of the Qantas team who are going to be sacrificing significant amounts of money until the financial year end.

In this admirable move, Qantas’s chairman will be taking no fees, the group CEO will sacrifice his entire salary and the Board will take a 30 per cent reduction in fees.

READ: 10 small business tips on preparing for coronavirus

The lesson for SMEs here is a clear one: when faced with adversity, business owners need to be prepared to make sacrifices for the sake of company stability.

While salary sacrifice might not be an option for some business owners or managers – especially for those founders who are still bootstrapping – the concept of being prepared to take a temporary hit for the greater good is a practice that will always reflect positively on a business owner and plays a big part in seeing a business through a rough period.