ACCT20080 Capstone Project: Ethics and Governance at Qantas

This report provides an in-depth analysis of Qantas Airways' corporate governance practices, focusing on its ethical outlook and stakeholder engagement. The executive summary highlights the company's commitment to corporate governance, ASX compliance, and effective communication with stakeholders. The report explores the composition of the board, including the roles of the CEO, chairperson, and independent directors, and examines the board's orientation, roles, and responsibilities. It interprets company communications using the legitimacy theory and discusses the company's operations within the aviation sector, including its market position, business trends, and commitment to sustainability. The report also delves into Qantas's approach to corporate governance, including its compliance with Australian laws, anti-bribery policies, and commitment to diversity. It analyzes the board's role in ensuring shareholder value, managing risk, and overseeing key committees. The report explores the remuneration framework, the composition of the board, the application of corporate governance theories (stakeholder, agency, stewardship), and the management of resources. The report concludes by discussing the company's approach to stakeholder management and voluntary disclosures, including its focus on corporate social responsibility. The report utilizes Qantas's annual reports and relevant academic literature.

Ethics and governance

Executive Summary
The report brings out a discussion on corporate governance and its related theories. The
company focuses on communicating to the stakeholders by making public statements. Qantas
has been listed on ASX that will comply with relevant disclosures of ASX provisions
regarding disclosures. The company is committed regarding the facilitation of effective
communication to the shareholders and membership at the Annual general meetings. One has
to optimise the shareholders by regulating and engaging best practises in obtaining
competitive advantage. The report comes up with introduction of the company “Qantas.”
Further, it brings out the composition of board, CEO, chairperson, and independent directors
in executing corporate governance. Further, there is a board orientation describing roles and
responsibilities of directors and independent executive administrators. The annual report
evaluations the interpretation of the organisation communication by using legitimacy theory.

Contents
Introduction to the organisation.................................................................................................3
Summary of corporate governance............................................................................................4
Board orientation of Qantas.......................................................................................................6
Interpretation of company communications using Legitimacy Theory...................................10
References................................................................................................................................12

Introduction to the organisation
Qantas is emblem carrier of Australia where it is the principal airline by the fleet size,
international destination, and international flights. Qantas was founded in 1920. Qantas is the
founding member of American Airlines, Cathay pacific, and British Airways. Qantas has 65
percent of Australian national market and it carries 14.9 percent of customers travelling in the
world. Currently, Qantas owns Jetstar Airways, which operates in both domestic business and
international business in New Zealand and Australia. In 2017, the company has an employee
base of 26,150 people (Qantas annual report 2019, 2019). Qantas currently connects to nearly
81 destinations in 40 nations. The company operates in several regional airlines in
maintaining several number of alliances, which carry 30 million people in car. As far as the
history is concerned, Qantas has teamed with the Australian post in the acquisition of star
roadway express that is a 30-year-old cargo shipper. By investing $50 million in Jetstar Asia,
Qantas has been looking outside the Australia to maintain its stake consolidation in global
aviation industry. The company has faced the challenge of accomplishing the privatisation. In
2007, Qantas conducts trial of the mobile phones with aero mobile facilities during the
national services on Boeing. In 2015, Qantas has agreed to have a deal with American cabled
link by availing them over 120 hours of the T.V. programmes with in-flight from the links,
which has been updated monthly and original lifestyle with the entertainment programming
from National Geographical Channel (Qantas annual report 2019, 2019). Qantas operates
under the Aviation trade.
The aviation sector avails total 62.7 million jobs in the world. The aviation industry
underpins Australian tourism with the estimated proceeds of $43.54 billion with addition to
$15.91 billion to the Australian economic conditions. The aviation sector continues to
upsurge with an aim to foresee future, which benefits both Australia and other markets.
Increasing figure of individuals living in Australia are born in foreign, which are further

driven with international economic growth, increasing air travel, and higher disposable
income emerging markets. Australian Airports Association has brought out 60% of the
regional airports running out through budget deficits in 2015. It has been seen that cost of
airports upgrades, operations, and maintenance are higher, which increases financial
pressures. The hubs for the company is the Brisbane Airport, Sydney Airport, and Melbourne
Airport. Demand for Air travel increases, Australian airports have been facing severe
competition for the skilled labour. In Domestic Aviation, it is seen that 61.65 million
passengers carry (nearly 1.2 percent) from 2016 with 681000 aircraft trips (Shogren,
Wehmeyer, & Palmer, 2017). In 2017, Qantas has commenced complimentary high speed
Wi-Fi on the domestic aircraft. Streaming is in-flight entertainment system towards iPads and
other personal devices provided in classes on selected aircraft (Izquierdo, Méndez, & García,
2018). Qantas club come up with several services and facilities such as lounge, frequent flyer,
in-flight system, and audio video entertainment system. Services used to enact NBN Co Sky
Muster satellites while delivering it to higher speeds as compared to on-board Wi-Fi. The
business trends for Qantas in 2017, 2018, and 2019 includes $16, 057m, $17060m, and
$17966m (Qantas annual report 2019, 2019).
Summary of corporate governance
The company commits to comply to Australian laws and regulations with higher level of
integrity. The people are obliged to understand how responsibilities affect competition laws
affecting the agreements with competitors, suppliers, and customers. It undertakes to fulfil
with anti-bribery laws, relevant policies, and non-compliance to the Qantas Group
Authorized Department (Qantas, 2019b). Australian corporation Act comprises several
requirements in the possession of the materialistic non-public statistics. The corporation has
been committed in creating and fostering culture where variety is appreciated and presence of
person at workplace, which is permitted from harassment, bullying, and discrimination

(Qantas, 2019c). The board is responsible is responsible to safeguard that Qantas do have
appropriate corporate governance structure, which finally objects to create and prevent
shareholder value. The board is obliged to ensure that Qantas management identifies legal
obligations for legitimate stakeholders.
Composition of board
The report overviews results for board, each director, and each committee summarising the
outcome for the board. Optionally, board effectiveness meetings are discussed where plans to
develop and check the progress have been agreed. The board considers timely and balanced
disclosures by ensuring that trading between the shares is conducted with consistent
communication and transparency with shareholders. Qantas established procedure to
guarantee that they would comply with endless disclosure responsibilities by comprising it
with bi-annual confirmation and executive management (Qantas, 2019b). Board of directors
is obliged to respect the rights of security holders that can promote two-way communication
to undertake actions for the investment community.
With an aim to prevent Qantas`s reputation, which is amongst one of the world`s secure and
safest air company while managing safety, environment, security, and health performance to
assist Board to monitor GMS. The health, safety, and environment committee have five
members, which includes CEO and four independent non-executive directors (Qantas,
2019c).
Chairperson and CEO
The result from the board evaluation is shared on the basis of understanding of how important
and effective the board is regarding the important factors. The identification of gaps between
what is important and how far improvements have been required enabling as an action plan.

The chairperson`s report indicates that it will shift to consumer preferences and extend its
presence in Asia by making the use of big data and also decrease footprint of environment.
Chairperson report states that by 2020, they will reduce plastic use by adding 100 million
items. They seek to become industry leader in environmental sustainability (Qantas annual
report 2019, 2019). The plan is to execute-
Measure Minimise Offset
National greenhouse and
energy reports to focus on
annual domestic emissions
Investment in fuel-efficient
programs by using aircraft
weight minimisation starting
Facilitating an appropriate
sustainable Aviation fuel in
Australia
Chairperson will offset the
employees travelling with
ground fuel emissions
These offsets will mitigate
to manage climate changes
and protect wildlife.
(Source: Qantas annual report 2019, 2019)
Directors and executives remuneration
Board has the remuneration team that will have three members, which are independent non-
directors (Qantas, 2019b). This committee is responsible to support board while satisfying
corporate governance duties in regards to the remuneration matters. The remuneration
framework for the non-executive executives with the pool of the director`s remuneration as
being approved by the shareholders. From the report, it is seen that the company faces weak
corporate governance for stakeholders (employees). There are certain differences with the
employees of Qantas such as labour unions against the Qantas (AAIPA, TWU, and ALAEA).
Board orientation of Qantas
The composition of board consists of majority of independent and non- executive directors
with the (CEO) chief executive officer. The chair is composed of independent non-executive

directors who is an Australian resident as being appointed by the Board. The chair is not
exercised to the role of chief executive directors of Qantas. The board orientation discuses
regarding the effective performance and leadership of board. It enables effective role of
directors and promote reverential relationship between the management and Board.
Independent directors are people who have the capability to exercise their responsibilities and
bring independent judgements to bear the issue. The comparison between various theories of
the board in regards to the corporate governance. The chair is not to exercise the role of CEO
of company and held at the location of CEO of Qantas. It is the approach through, which
there is a list of criteria that is appropriate. The roles and responsibilities of directors include-
1. Input into the final approval regarding the corporate strategy (Shogren, Wehmeyer, &
Palmer, 2017).
2. Appointing the company secretary
3. Approving the purpose of Qantas and its related statement of the values, which
promotes culture of ethical and obliged decision-making, timely reporting, and
compliance with related legal obligations.
4. Checking the progress of major capital expenditure, acquisitions and capital
management.
5. Satisfying appropriate risk management framework exists in regards to non-financial
and financial risks (Qantas, 2019a).
6. Oversighting the Qantas Group that includes accountability and controlling system
7. Satisfying to manage the appropriate risk, which exists to the financial and non-
financial risks, which reviews, manages risks, monitors, legal compliance, and
corporate policies.
8. Approving the remuneration framework (Qantas, 2019a).
The determination of theory can be executed only after analysing the control of directors.

Orientation Board composition Brand focus Key
communications
Shareholder-
Stewardship
Non-independent
directors to how
company runs and
grows through its
assets
Internal needs-
capital management
and growth strategy
Cash flows,
chairperson report,
and balance sheet
Ethical branch-
Stakeholder
1. Independent
reflecting the
diversity of
the
stakeholders
(Qantas,
2019a).
Stakeholder
management- All the
stakeholders
Voluntary
disclosures with the
focus on Corporate
social responsibility
Managerial branch-
Stakeholder
Independent
stakeholders, which
is appointed to
reflect through the
diversity of the
stakeholders
Stakeholders include
stakeholder
management
Voluntary
disclosures includes
the probable focus
on CSR
Agency-Shareholder Independent
directors as being
installed by the
shareholders
Need of
shareholders
Growth, profits, and
dividends
Remuneration
report- Balance
sheet (Equity funds)
and income
statement

Resources The mixture of non-
independent and
independent is not
quite important.
Board has the
mixture of skills
with the contacts to
secure vital
resources in the
company.
External aims
include capital
management, and
flow management of
resources. The focus
is to avail and
provide resources.
Contingent brings
out what serves best
to the company to
secure resources.
After analysing the theories, it is seen that the independent directors majorly manage
company and its operations. Therefore, from the above table it is seen that the company
applies one of the theories of corporate governance amongst ethical approach based on
stakeholders, agency theory approach, and managerial branch based on stakeholders
(Shogren, Wehmeyer, & Palmer, 2017). Board composition is defined as the lying and
depending on independent directors in against to the proportion of non-independent directors.
The board follows the agency theory as it has the majority of board as being independent
directors appointed and recruited by the powerful shareholders. Whereas, the stewardship
board have the majority of non-independent directors who know how to increase the assets of
the business. The related theories of corporate governance, which includes stakeholder
theory, stewardship theory, sociological theory, and agency theory. Stakeholder theory
includes the integration of sustainability reporting, which avails to suggest accurate financial
and non-financial figure through wide range of stakeholders. When complying it with the

financial accountability, the reports undertakes the impact of monetary, social accountability
and environment (Bendickson et al., 2016a).
Agency theory is principle, which is used to elaborate and further resolve issues in
relationship between principals, agents, and shareholders. Agency theory consider disputes,
which arises two key areas considering difference in goals and the difference in risk aversion
(Joslin, 2019). Stakeholder theory is related to organisational management and ethics, which
account for constituencies affected by the business organisations like local communities,
suppliers, and employees. It addresses values and addresses in conducting organisations in
relation to market economy, and corporate social responsibility. Stewardship theory is a
theory, where manager acts as responsible stewards of assets, which they control.
Sociological theories are the statements regarding how particular facts tell about social world
(Bendickson et al., 2016b). It considers the aspects of social world and further enable
predictions regarding the future events. It is seen that the company follows agency theory,
which is different from owners, and stakeholder interest. Management as agent considers
achieving goals for owners. Furthermore, the theory focuses on extreme divergence interest
and objectives of the organisation`s stakeholders. The compensation has used to align the
interest of the stakeholders (Fernández et al., 2017). There is a principle where there is an
agency relationship between Qantas in Australia and its expats asking for compensation. The
board focus on the necessities of board on the behalf of shareholders where there is a focus
on stakeholders engaging in holistic stakeholder management (Ghasemi, & Razak, 2017). It
identifies the form of communication, where different boards will prioritise, as agency board
will focus on financial statements and its remuneration report. It shows managers are
accomplished to shareholder`s objectives. The corporate governance statement considers
induction and continuous up gradation of directors by working on the knowledge of Qantas
Group. The board assesses the performance and undertakes annual review of performance. At

Qantas, the company is proud of nearly 100 years as it values lived experience of inclusive
culture contributing towards the success and strength (Fernández et al., 2017).
With an aim to protect Qantas reputation, it is seen that Qantas is one of the world`s secure
airlines in order to manage health, safety, and environment (Izquierdo, Méndez, & García,
2018). The security of committee comprises of five members such as CEO, four independent
non-executive directors. It aims to achieve safety, health, collaborative effort, involvement,
and open communication at each level of workplace (Izquierdo, Méndez, & García, 2018). It
identifies people to demonstrate excellence and develop innovative safety solutions. Further,
they strives to provide education and training on the basis of defined competencies. It comes
up with meet and exceed compliance with legislations and organisation policies and standards
(Bendickson et al., 2016b).
Interpretation of company communications using Legitimacy Theory
The theory incorporates the making of voluntary actions while operating and using resources
being availed to society as per the value to environment, which follow and respect. With the
assistance to sustainable and integrated reports, it will revert to society. As being released on
media, the latest advert of Qantas shows up the spirit of Australia regarding the Joyce`s
leadership. Qantas has remained a boss on the social issues as it fights the economic
challenge too. Most corporate leaders prefer to talk regarding the social issues rather than
hitting the bottom line. For example- Qantas has inculcated trust level among the customers.
With this level of trusts, the corporate leader incredibly spoke regarding the myriad issues
from social policies will include same sex marriage to tax cuts, need for the industrial
relations reformation, and free trade (Elphick, 2017).
On the other hand, climate changes and payment of employee bonuses feature questions from
floor (Albrechtsen, 2018). Chief executive officer repeatedly ask regarding to delay paying

staff as their bonuses. From the media releases, it is seen that the issue has demoralised whole
staff but the corporate leader focus on profitable organisations. Legitimacy theory is a process
through which it supports organisation while implementing, and developing environmental
and social disclosures with an aim to fulfil social contracts. Legitimacy theory has the role of
elaborating the behaviour of companies in generating and implementing voluntary social
disclosures of data in maintaining social contracting to achieve objectives (Elphick, 2017).
The company is committed to be recognised as the leading airline towards the
environmentally sustainable. The company aims to become environmentally responsible and
reduce the environmental footprint of the organisation. The company uses long-term strategy
in its annual reports, which includes transparent reporting and robust measurement for the
environmental footprint. It is based on investments in advanced technologies with fuel-
efficient aircraft (Albrechtsen, 2018). There is an active participation of company to
accomplish sustainable aviation. One need to support and engage suppliers and people in
creating capability, contribution regarding the Qantas group and representing leadership
(Ghasemi, & Razak, 2017). The annual report represents and develops security system that
could protect people, assets, and customers. One can encourage security culture that will need
to report as their responsibility. People understand better version and contribute in
understanding where environment operations are quite safe and secure (Bendickson et al.,
2016a).

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