'Hard to fathom': Government's protection of Qantas profits under fire

Airline also forced to admit the amount of flight credits it owes customers is much larger than what it had been saying.

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Qantas Airways Limited (ASX: QAN) celebrated a record financial result last week, but in just a matter of days the airline is copping flak from all and sundry.

The week started badly for the carrier.

On Monday its longtime chief executive Alan Joyce was hauled to Canberra to answer questions at a senate enquiry investigating cost of living pressures.

The politicians grilled him on a range of issues, including high airfares, poor service, treatment of customer flight credits, the blocking of additional Qatar Airways flights into Australia, and the prime minister's son's membership into the Chairman's Lounge. 

That was bad enough for Joyce, but the words that would supercharge the criticisms of Qantas would be uttered outside that room.

Assistant treasurer Stephen Jones pretty much admitted that the federal government rejected the Qatar application for further flights in order to protect Qantas.

"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."

Former federal treasurer can't understand why taxpayers are protecting a private company

The criticism of Qantas and its cosy relationship with the government has continued Tuesday and Wednesday.

Former federal government treasurer and Future Fund chair Peter Costello expressed his incredulity that Canberra would protect record profits for a private business.

"It is hard to fathom why the government would not allow more flights into Australia at a time when fares are so high and volumes are still down on pre-COVID levels," he said in the fund's results call.

"The suggestion that the government somehow had a responsibility to protect [Qantas'] profit, I just can't understand."

Australian Financial Review columnist Joe Aston, who has led the public charge for proper scrutiny into Qantas' behaviour, started to mockingly call the current Canberra regime the "Joyce-Albanese government".

"Openly contemptuous of Joyce and highly attuned to his bulldozing, the senators did a mighty job of interrupting his implacable cognitive firewall. 

"When you've got Jane Hume and Tony Sheldon on a unity ticket against you, you know things are bad."

The airline is also under fire for potentially misleading statements regarding COVID-era flight credits owed to customers, which are about to expire in just four months.

Since the annual report, the company and Joyce had been persisting that the balance stands at $370 million.

However, after the grilling at the senate enquiry, the total could be more than $520 million including amounts owed to Jetstar and overseas customers.

The Qantas share price is down 2.7% this week.

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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