Qantas: A case study in how reputation can impact share price

Qantas staged a remarkable financial recovery in the 2022-23 financial year. The airline delivered a record profit of $2.47 billion after suffering a $1.86 billion loss in 2021-22. You would assume the company’s valuation and reputation would improve after this turnaround. However 2023 has seen Qantas’ share price nose dive after a number of self-inflicted reputation hits.

These missteps included accusations of defrauding customers and price gouging, wrongly sacking staff while executives pocketed millions, wrongly standing down staff over OH&S issues, influencing government policy to the detriment of consumers, strategically devaluing its frequent flyer program, and job cuts that staff say have led to a drop in performance. All the while Qantas’ reputation has been shredded as a result of how they have managed the backlash to these events and decisions.

This mismanagement has not only led to a massive drop in public trust, but to the early departure of its CEO and Chair, a shareholder revolt at the company’s AGM, declining staff morale, a parliamentary inquiry into the airline sector that focused on Qantas’ behaviour, and a legal case from Australia’s competition watchdog.

The impact on the company’s share price?

Qantas’ share price dropped from $6.80 in March 2023, to $4.74 in late October 2023 shortly before the company’s AGM. This represents a 30% drop in the company’s share price at a time of record profits and a rosy outlook for the airline industry.

While Qantas’ share price has recovered slightly to $5.26 at the time of publication, the drop in the company’s value has corresponded directly with its public reputation hits.

Qantas’ performance in 2023 shows why reputation matters, and how a company’s reputation represents a material risk to shareholders. So how could Qantas have avoided some of these self-inflicted reputation hits and what can they do to repair their tarnished reputation?

1/ Put the customer at the centre of decision making

Qantas’ new CEO and leadership team need advisors willing to question and interrogate their decision making process, including how certain decisions will be received and how this will impact customers, stakeholders and the broader perception of the company.

Who at board or executive level was questioning how customers, or the public will react to tickets being sold for flights that didn’t exist? Who was questioning the wisdom of executives receiving millions in pay while sacking thousands of staff? Organisations such as Qantas need to see their communication teams as strategic advisors, not as a fall back for navigating out of crises.  

2/ Manage crises with empathy and honesty

Qantas’ response to issues such as poor performance or accusations of defrauding customers has been defensive and ‘organisationally focused’. Instead, the company must put a ‘customer-focus’ on its crisis communications by showing empathy and communicating openly, honestly, consistently and transparently at times of crisis.   

3/ Keep out of the media and focus on the customer

After making daily headlines for the wrong reasons in 2023, it’s time for Qantas to step out of the media spotlight and focus on improving service and doing the right thing by its customers. An expensive ad (can Qantas really claim to be the ‘Spirit of Australia’ right now?) or PR campaign might not be well received, and cannot instantly repair Qantas’ brand.

Qantas has shown that while it takes years to build your reputation, it can take very little time to ruin it. Qantas must focus on its core business and its customers in 2024 if it wants to repair its reputation.