The Australasian by

  • Written by Flinders University

Hot on the heels of headlines about Qantas and unfair worker dismissals, fare refunds and ticket sales manipulations, business analysts are calling for results from the Australian airline’s climate action plan and carbon emissions in the industry in general.   

Profits might be on track but Qantas’s managerial ability to efficiently manage resources and operate in a sustainable manner remains questionable, says Flinders University finance academic Dr Wali Ullah, co-author of a study of ‘managerial ability and climate change exposure’ in the International Journal of Managerial Finance. 

With greenhouse gas emissions from the global aviation industry making up about 2.5% of the world’s carbon pollution, Australian airlines and Qantas’s new CEO and management should take steps to take immediate steps to improve its environmental footprint, he says.  

“Our research supports the view that greater managerial efforts to efficiently use a firm’s resources can protect the company against exposure to climate change risks and challenges, says Dr Ullah  

Qantas’s emissions reduction target goals through the $400m climate fund, its Climate Action Plans and consultations with the Taskforce on Climate-related Financial Disclosures are commendable, he says, “but we are yet to see real actions as the industry rapidly climbs back to pre-pandemic levels”.   

“Even with accounting profits back on track with shareholder expectations, Qantas could face a worse position post-pandemic if competition increases in the Australian airline industry in the face of the latest reputational declines, skilled worker shortages and technical issues.  

“Most of its latest recorded accounting profit are on the back of high ticket prices, lack of competition, staff cuts in spite of receiving government support during the pandemic and ticket sale manipulations – for which the company is facing a class action lawsuit. 

“Until Qantas and other airlines take some real actionable steps on fuel efficiency and carbon emissions, the pressure is on management to make some long overdue changes.     

Before the pandemic, Qantas ranked as one of the worst major airlines for fuel efficiency and carbon emissions in trans-Pacific routes due to outdated operating procedures and running inefficient four engine planes, including Airbus A380s.  “By comparison, Virgin Airlines was only 6% below the top performers, Hainan, ANA and Air New Zealand. 

“Stakeholders should be alarmed if this doesn’t improve, even though the Qantas share price had a 143% capital appreciation under former CEO Alan Joyce.”   

The latest study was on US-based public companies but considered a machine-learning-based, firm level climate change exposure measure that included stakeholder concerns in quarterly earnings calls arising from three dimensions of climate change risk – physical, regulatory and transitional risk factors. 

The article, Managerial ability and climate change exposure (2023) by GM Wali Ullah (Australian Institute of Business, Flinders University), Isma Khan (UniSA Business) and Mohammad Abdullah (Universiti Sultan Zainal Abidin, Malaysia), has been published in the International Journal of Managerial Finance


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