The Qantas AGM yesterday was a lively affair with all the “crazies” in attendance but outgoing chairman Margaret Jackson would have been pleased with the 90%-plus voting support for all the resolutions despite the fiasco of undercooked profit forecasts during the APA bid.

I went to the meeting armed with four excellent Terry McCrann columns – especially this corker which calls for an ASIC investigation. This timeline simply damns the board:

  • September 2006: Qantas told the market they were expecting a 25-30% rise in pre-tax profit for 2007-08.
  • February 2007: upgraded forecast to 30-40% profit growth.
  • March 2007: upgraded to “upper end” of the 30-40% profit growth range.
  • March 20, 2007: Jackson made her infamous “mental problem” attack on institutions predicting the share price would plunge if the bid failed.
  • Early May: APA bid fails with shareholders still being told a $940m full year pre-tax profit was coming.
  • August 2007: Qantas unveils $1079 million pre-tax profit, 60% up on the previous year and $139 million ahead of the forecast directors used to urge shareholders to sell.

I told the board they should be outraged by this inaccurate information flow coming from a conflicted management and that we need a decent internal inquiry to establish how they so badly misled shareholders about a financial year that was already more than 10 months old when the bid collapsed.

Jackson’s defence was that airline earnings are volatile and Qantas had an absolutely bumper May and June. Think about it for a moment and this really does stretch credulity. Were the budgets really showing profits of just $1 million a day and then suddenly $60 million for May-June became $199 million – more than $3 million a day. Surely the forward bookings in early May as the bid was closing would have pointed to this.

You just can’t miss $139 million in profit at a time when you’re meant to be talking up your prospects and maximising shareholder value. Instead, this is how Jackson attempted to neutralise the issue in her formal address:

We handled it with impeccable integrity and with the toughest protocols ever established to manage conflicts of interests. We took advice from the best lawyers and financial advisers in the country. The Directors made the unanimous decision to put the bid to shareholders and we believe we did exactly the right thing. The Bid period coincided with a dramatic increase in Australian and international markets.

The sudden $139 million end of year profit boost had nothing to do with sharemarkets. Yes, the bid should have been recommended but that recommendation should have been withdrawn as new information came to light.

Based on yesterday’s voting and today’s papers, the Qantas board really have gotten away with it. The PR strategy was clearly to create a diversion through the $4 billion aircraft order and it worked a treat with most of the coverage starting with that angle.

Check out the vision of Rupert Murdoch apologising for Glenn Milne in today’s Mayne Report video, plus another on what happens when you’re trying to suppress a sneeze when being interviewed on television.