Qantas share price sinks after CEO grilled by senators

The national carrier is under fire for poor service and anti-competitive lobbying, all while pulling in record profits.

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The Qantas Airways Limited (ASX: QAN) share price is taking a battering in early trade on Tuesday after its outgoing chief executive faced a grilling at a senate enquiry yesterday.

The airline stock was down 1.63% to $6.02 at the time of writing.

Let's break down what transpired on Monday:

The travelling public and politicians sick of Qantas' poor service

Qantas chief executive Alan Joyce, who is due to step down next month after a controversial 15-year reign, was called to answer questions at a senate enquiry looking into cost-of-living pressures.

The politicians — reflecting public anger over high airfares and poor service while raking in record profits — didn't hold back in their questions.

In addition to service concerns, the federal government's much-maligned decision to block Qatar Airways from adding more flights to Australia was under scrutiny.

There is a perception, rightly or wrongly, that Qantas influenced government figures to veto against the interests of consumers and the wider Australian economy.

The government has since given five different reasons as to why it made that decision against the wishes of the tourism industry, state governments, and the general public.

Appalled at government's protection racket

The latest excuse, given on Monday by assistant treasurer Stephen Jones, rocked the industry.

"We can drive prices down but if we drive them down to a level where it's actually unsustainable to run an airline, instead of having two carriers we will design our markets in a way which will make it unsustainable for the existing Australian-based carrier."

Understandably, Virgin Australia chief Jane Hdrilicka was appalled that the government admitted to protecting Qantas.

"It's a disappointing statement and I'm sure that every CEO in the country was disappointed to hear that there's one company in the country that should be protected," she told ABC RN Breakfast.

"In a year where Qantas posted $2.5 billion in profit, the largest profit that it's ever recorded, I'd be surprised if that was a moment of honesty because it just can't possibly be right."

Qatar was one the rare airlines that continued to fly to Australia during the COVID-19 lockdowns, allowing Australians stranded overseas to come home.

While Qantas operated some "rescue flights", the government paid a fee for those.

Nationals senator Bridget McKenzie, according to the AFR, asked the chief executive why the foreign carrier had "done the heavy lifting" in that period.

Joyce responded that Qatar Airways is subsidised by its government, but later had to concede that Qantas' Middle East partner Emirates also enjoyed the same privilege.

The senate enquiry also grilled Joyce over membership to the invitation-only Chairman's Lounge, after it came to light in recent weeks that the prime minister's son has been provided access.

While the Qantas chief didn't respond, the company could later be compelled to reveal politician family memberships and the timings of its communications with the prime minister and transport minister regarding the Qatar decision.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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