Owners have the final say

For once, it's possible to have some sympathy for the Gillard government.  Politically, it's in a no-win situation with Qantas.

If it sides with Qantas management, the chances of the company's survival improve but the government alienates its trade union base.

If the government sides with Qantas employees it's quite possible that in a few years' time, the company those employees now work for won't exist, or at least not in its present form.

So far the government has sided with Qantas employees.  Prime Minister Julia Gillard has made it quite clear, many times, that she's got no problems with staff taking industrial action to stop Qantas outsourcing and establishing overseas operations.

The legislation the PM engineered when she was industrial relations minister established the regime that gave Qantas no choice but to lock out its staff.

It's her legislation that Fair Work Australia was using when it applied an apparent double standard.  According to Fair Work Australia, months of persistent strikes by the unions did not cause significant harm to the aviation industry, but management's lockout did.  But as flawed as the Fair Work Act is, the legislation did not cause this fight.

A showdown between Qantas and its employees was probably always inevitable.  The fight is existential.  It is literally about the existence of the company.  According to Qantas chief executive Alan Joyce, if the company is to continue as a going concern, he must, have the ability to cut costs and change staffing arrangements.

You don't have to listen to Joyce's words to judge if he genuinely believes what he's saying.  His actions prove he's serious.  If the chief executive did not believe Qantas's future was at stake, he would not have shut down the company and risked irreparable harm to staff relations, to customer relations, and the company's brand.

It's as close to betting the firm as you can get.  And the board of Qantas would not have allowed Joyce to do what he did if it did not think what he did was necessary.  Clearly, the company's owners thought Joyce did the right thing, which is why the Qantas share price jumped on Monday morning.

The politicians might not like it and the Qantas ground staff, engineers, and pilots might not like it either, but ultimately the future of the company rests with its owners -- not anyone else.

That's the situation under the law and it's the commercial reality.  The responsibility of Qantas's management to the owners of the company is something that's been all but ignored in the past week.  It's cute that people have an emotional attachment to children in white shirts singing I Still Call Australia Home but this doesn't stop them shopping around for the cheapest fare to Europe.

In a world of ''stakeholder engagement'', a concept such as ''management prerogative'' is not much in vogue these days.  Keeping stakeholders happy is a nice thing to do, but that's a bonus.  If the company isn't around, there won't be any stakeholders left to keep happy.  The stakeholders of Ansett were probably quite happy, right up until the company collapsed.

The only interest the federal government has in Qantas is a political interest.  It suited the politicians just as much as it suited the company for Qantas to be handed special privileges as our ''national carrier''.

As yet, no one has ever defined what ''national carrier'' means.  No doubt Qantas management doesn't like being preached to by government ministers, but that's the price the company has to pay for the government keeping out the competition.

The interest of Qantas employees is their own continued employment on the best possible conditions.  The pilots' union can talk all it wants about how Qantas planes should be flown by ''Qantas pilots'' (by which the union means that the company should not at any time in the future employ pilots on lesser conditions than they now enjoy) but that's a decision for the company's owners to make.

Sometimes the interests of company employees and company owners coincide.  At least that's the theory.

Qantas is an instance where that theory breaks down.  The way our system of corporate governance works is that when push comes to shove, it's the owners who have the final say over running the company -- not the employees, and not the government.

If Qantas employees want to run Qantas, they can;  they can buy the company and turn it into a workers' collective.  If the government wants to run Qantas, it can nationalise it.

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