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This is Andrew Peach with World Business Report.
Good to have you with us. Today, a court in Australia fines the airline Qantas $58 million. for sacking 1,800 ground staff during the pandemic.
Qantas has been called out. We hope, of course, this sends a strong signal that Qantas and no other company will behave like this ever again.
Meanwhile, Canada's biggest airline is grounded despite a government order for flight attendants to end their strike action.
And the Swiss watchmaker Swatch apologises for an advert condemned as racially offensive.
Chinese social media erupted with anger over this ad that they saw from the brand showing an Asian model pulling back the corners of his eyes.
Let's start in Washington, though. All eyes on the imminent meeting between President Trump, President Zelensky and other European leaders to talk about the future of Ukraine.
Friday's summit between Donald Trump and Vladimir Putin in Alaska didn't get to any deal.
Now there's a hastily arranged meeting at the White House, which the leaders of France and Germany and the UK are attending to show support for Vladimir Zelensky.
When the war started three years ago it threw the global economy into turmoil.
So how are the markets reacting today before the meeting?
Jane Sydenham, Investment Director at Rathbones Investment Management, is with me today.
Any sign of market reaction at this point, Jane?
I mean, not particularly. We're sort of slightly in the summer doldrums, that holiday period where there isn't a great deal going on.
But it's probably worth saying that defence policy stocks are fairly strong today in the UK and across Europe, as there's definitely a sense that Europe is going to have to take more responsibility for its own defence.
It'll have to spend money. Whatever the outcome of the talks, there's a sense that Europe is going to have to take responsibility and not rely on America.
So those stocks are up a fair bit. OK, so defence companies obviously might do well out of military action or a change in where the military support comes from.
The markets were sent into turmoil when Ukraine was invaded.
So if there were a ceasefire or a peace deal of some sort...
What would be expected to happen then? No, it's a very interesting point.
I mean, one of the reasons that the markets were sent into turmoil initially was because the oil price was went very high.
There was a sense that if there were going to be sanctions on Russian oil, And of course, also difficulties in terms of accessing gas for Europe. that that was going to be a problem and push up inflation.
But of course, as quite a lot of time has gone by, the whole energy map has slightly rerouted itself.
Europe is getting sources of gas from other places.
Russian oil is going. to other parts of the world and so on.
So a lot of the reasons for markets... to fall, which were really energy related, have in a sense been resolved to some extent.
Having said all of that... It's likely that there would be spending on rebuilding Ukraine.
So construction stocks and infrastructure investments would be likely to do quite well.
More with Jane on the way. Now, a court in Australia has fined the airline Qantas the equivalent of $58 million for sacking more than 1,800 ground workers. during the COVID pandemic.
This is the largest fine ever imposed by a court for violations of industrial relations in Australia.
Former Qantas worker Anne Gagouris gave her reaction outside the court.
Of course angry. This was supposed to be our retirement job.
A lot of our workers haven't found jobs. all over the age of 50s, it's impossible.
Our correspondent in Sydney is Phil Mercer.
Well, it's costing Qantas a small fortune, not only a fine of £58 million.
US dollars has been imposed by Australia's federal courts.
And that comes on top of An earlier agreement for the airline to pay $78 million in compensation to the workers it illegally sacked. during the COVID pandemic in 2020.
So all of this has a huge financial bearing. on Australia's national airline.
And on top of that, of course, untold damage to the airline's reputation.
And if you look at the court's judgment, the judge involved has been especially scathing of its corporate culture as well.
How did Qantas come to lay off 1,800 people as it turns out illegally?
Well, all of this began in 2020 when the airline decided to outsource.
This is when outside contractors... are brought in to carry out duties that are normally done in-house relating to its ground operations services.
So this meant that hundreds of baggage handlers and ground staff were dismissed.
At the time Qantas was saying that this was a necessary financial measure because the aviation industry around the world was coming to a standstill during the pandemic, essentially saying, that the decision to sack 1,800 workers was driven by commercial motivations.
The trade union movement here in Australia saw things very differently.
It sued Qantas, insisting that its decision to sack 1800 workers was not only an attack on them, but also on the trade union movements. and their rights as workers.
And it's interesting to note that previously, a court has found that Qantas had partly outsourced its workforce to limit workers' ability to take industrial actions.
So the court in that particular part siding with the trade union movement when it says that Qantas was motivated by a desire to crack down on the trade union movement.
We're going to hear from one of the union leaders in a second or two, but does this have broader implications for other firms and how they operate in Australia?
Well, the federal court justice, Michael Lee, says that he wants this fine, which is the biggest of its type in Australian corporate history, to be in his words, a real deterrence to other employers.
So what you have here is a judge who was very forthright in his criticism of Qantas, saying that he noted the airline's unrelenting support and aggressive legal strategy, which he took as a sign of the company's efforts to avoid paying compensation to workers, for example,
The company had apologised for the mass sackings during the pandemic, but the judge said that he didn't believe that this contrition was was genuine.
We did hear from the Qantas boss, its CEO, Vanessa Hudson.
She said that the company, as you'd imagine, had agreed to pay the fine.
And she also said that the court's ruling held Qantas accountable for actions that caused real harm. to employees all those years ago during the pandemic.
So this in the eyes of the court, should serve as a warning to other companies around Australia to make sure. that it takes industrial relations and the workers' rights that are enshrined in that legislation very seriously.
Phil Mercer with me from Sydney. Well Qantas was ordered to pay by the court more than half the money directly to the Transport Workers Union which sued the airline.
I've been talking to its National Secretary, Michael Caine, who shared his reaction to the ruling.
This is the end of a five-year battle. Five years ago, Qantas booted these workers to the curb. unceremoniously, and as it turns out, illegally, 1,820 Qantas families who'd really built the spirit of Australia.
We took this company to court five years ago.
We won the first case. We won the appeal and then Qantas under Alan Joyce took these workers all the way to the High Court and we won again.
These workers since last year received $120 million worth of compensation for economic loss and pain and suffering.
And today... We had the penalty case. What was Qantas going to be pinged for breaking the law?
And the judge today was scathing. $90 million.
He has fined Qantas. And to finalise this case...
He sent $50 million of that to the union to make sure this doesn't happen again.
Clearly, it's been a good day for workers.
They've been vindicated. And clearly... Qantas has been called out and we hope, of course, this sends a strong signal that Qantas and no other company will behave like this ever again.
It's often hard to predict how these employment cases will go.
How confident were you? We weren't confident at all, to be perfectly honest.
When we started this case, many people said, you've got to be kidding, this is a long shot.
And it was a snowflake's chance in hell for us.
But we had no option. 1,820 workers had been sacked.
And if... The rest of the union, the 60,000 odd other members, had just let that go through to the Keeper. well then it would have been like a permission slip for employers to do this into the future.
So we took the case on as it transpired.
The evidence crumbled for Qantas. The evidence poured out against them.
And it really... really come and what came to pass was that Qantas had contrived this situation long before they made the decision.
They were determined to stop these workers exercising their industrial rights, including taking industrial action.
And so they use the cover of COVID to sack them.
That's illegal. And today, Justice Lee and the Federal Court of Australia has made a very strong statement, a $90 million statement that companies cannot do this ever again.
What's happened to the staff? Have they just gone on to find other work?
Well, no, this is the tragedy of it all.
Most of the staff couldn't get... work again in the industry.
They're in a sense black banned. And the result of that was that when COVID was over, Our airports were in crisis because we didn't have the experienced staff to deal with the flow in after COVID.
Do the people who lost their jobs get some of the money that Qantas have been fined?
Well, these workers have already received $120 million worth of compensation.
That was a decision that the federal court made last year.
And this was about penalty. And the judge has pinged Qantas 90 million.
He sent 50 million of it. to the union so that the union can continue to do its work and he's put 40 million dollars aside And that $40 million is likely to find its way to the workers as an additional payment.
So yes. These workers have got 120 million already.
They're likely to get another 40 million as we go through this process.
You know, it's been difficult for them, but this is going to be some solace.
But what's important here is the strong message that's been sent to both Qantas and Corporate Australia.
If you break the law, you will be held accountable.
Michael Caine, the National Secretary of the Transport Workers' Union in Australia.
Qantas chief executive Vanessa Hudson said we sincerely apologise to each and every one of the 1,820 ground handling employees and their families. who suffered as a result.
Meanwhile Canada's biggest airline says its entire fleet remains grounded despite a government order for flight attendants to end strike action.
Flight attendants from Air Canada are calling for higher salaries and to be paid when they're working when aircraft are on the ground.
Natasha Stay is the President of the Union representing Air Canada workers in Montreal.
We are heartbroken for our passengers. Nobody wants to see Canadians stranded or anxious about their travel plans. but we cannot work for free.
Air Canada has called this unreasonable for asking for better than poverty wages. just one year after they gave their pilots a 26% increase.
Live to our correspondent in Canada, Jessica Murphy.
Jessica, thank you for being with us. Just explain why they're on strike first.
Well, this all began last week after negotiations between Air Canada and the union. reached that impasse, as you mentioned, over wages and unpaid work.
This came after eight months of talks. Now you have some 10,000 flight attendants who have been walking the picket line since Saturday morning.
And really, there's no clear path forward after the union defied the back to work order, the first back to work order on Sunday.
That came after the federal government ordered binding arbitration through an independent tribunal.
This morning, just this morning, that independent tribunal, the Canada Industrial Relations Board declared the strike unlawful and ordered the union to end its strike activities by noon Eastern today.
And for union members to return to work, we are still waiting to hear from the union and for their response.
Strike is unlawful on what grounds? They said, I mean, that they're defying the back to work order.
So they said they are immediately to cease all activities.
And that the unlawful strike in its members to direct members of its bargaining unit to resume performance duties.
And this came after the government on Saturday. announced that they would push for binding arbitration.
That came from Jobs Minister Patti Hajdu on Saturday, saying that stability and supply chains must be preserved.
So this was... ordering them into binding under arbitration under Canada's labour laws over the weekend.
Just this morning, Prime Minister Mark Carney urged both parties to quickly resolve the dispute and said we'd hear more from Jobs Minister Patty Hajdu later today on the latest.
Interesting. Tell me about the disruption being caused.
The disruption, in short, is a lot. The airline estimates that some 500,000 passengers have had their flights cancelled.
That's leaving many in limbo. It's offered refunds or credit for future flights.
But it's also offered to rebook flights.
However, it is a busy summer travel season.
The options are limited. The airline says that it does plan to resume flights this evening again.
If that will happen is still a question.
But even then the airline has warned that if it does, it could take at least a week to return to full service.
And all pretty damaging for Air Canada, obviously.
Yes. And in fact, the financial effect right now is still unclear because we don't know exactly how this dispute will end.
But it certainly can be costly. The last extended strike was in the late 1990s.
That was of Air Canada pilots. That lasted almost two weeks, and it cost the airline about $130 million Canadian.
That's $100 million U.S., so again, it can be quite costly for the airline.
Thank you very much indeed, Jessica. Let's bring back Jane Sydenham from Rathbones Investment Management. still with me.
Let me just get your reaction to these stories first of all.
What about this ruling in Australia against Qantas?
I mean, it certainly sends a pretty strong signal in terms of how companies should handle these situations. from a share price perspective, is that actually Qantas shares have been performing incredibly strongly recently.
We've got to remember this relates to four or five years ago.
It's not a recent issue. And so... the share prices factored all of these risks in quite a long time ago.
That's how share prices tend to work. But it certainly means that Qantas have got to be careful going forward.
And then I think as far as Air Canada are concerned, They're really in the early stages of this and it's quite damaging.
The share price is down about 3% or so just under this afternoon.
The issue with airlines is they have huge expenses, so enormous costs there.
And they only need a sort of small improvement in their turnover or a small reduction in their turnover. to make their profits increase or decrease quite significantly.
They have what we call very high operational gearing.
So they're very, very sensitive. to a shutdown for even a relatively short period of time can really damage their profits and their revenues.
They also seem to be particularly sensitive to publicity news stories about them.
Why is that? I think it's because everybody flies, everyone has the experience, or many, many people do, of using technology.
And so these kind of collective challenges.
Labour issues are quite sort of high profile.
People are quite affected, of course, by delays on work. on airlines and so on.
So they tend to sort of pick up on the detail of these things quite quickly.
More with Jane on the way in a second or two.
This is World Business Report with Andrew Peach here on the BBC World Service.
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This is Jacob Goldstein from What's Your Problem?
When you buy business software from lots of vendors, the costs add up and it gets complicated and confusing.
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Check out Odoo at odoo.com. That's odoo.com.
The Swiss watchmaker Swatch has apologised and pulled an ad featuring a model pulling the corners of his eyes. after it was an image that prompted uproar among social media users in China.
Critics say the pose resembled the racist slanted eye historically used to mock people from China and other countries in East Asia.
The first time I saw this picture, because the model himself was also an Asian model, And he made this gesture of pulling the corners of his eyes.
And it was impossible for him not to know that this was a racial discrimination.
So I don't know why he did this. You can see that the company can publish this picture.
It must have gone through batch approval, so top management obviously had an indifferent attitude towards this.
I feel that they don't pay much attention to Asians or just don't feel that this is a wrong thing from the bottom of their heart.
To find out more, I spoke to our correspondent in Singapore, Ko Yu.
It's been a whirlwind weekend for Swatch.
On Friday, Chinese social media erupted with anger over this ad that they saw from the brand. showing an Asian model pulling back the corners of his eyes.
People saw in that a resemblance to the slanted eyes gesture that was historically used to mock On Saturday, Swatch put out a statement apologizing for the ad and pulled the images from their campaign.
In their apology, they said that they have taken note of the recent concerns regarding the portrayal of a model. and they sincerely apologize for any distress or misunderstanding this may have caused.
Do we know what the idea was in the first place?
Have they not really explained that? No, and that's what Chinese social media users are also... angry about, they are not appeased by the apology at all, saying that they are not actually apologizing for the campaign.
And Swatch hasn't really explained what was the thinking behind that post.
And Swatch do sell using various brand names a huge amount of stuff in China.
They do. They are a watch brand that also sells brands like Angine, Tissot, Omega.
So yeah, it's a big brand, including lots of watches and swifts under the Swatch group.
I imagine it's too soon to tell any immediate impact on its trading in China.
It's a bit too early to tell, but they are certainly worried.
They were probably thinking about that when they put out the apology.
Last year, around 27% of its sales actually came from China, Hong Kong and Macau.
So the Chinese market is obviously a really big one for them.
And this sits as part of a trend of people in China being motivated by social media.
I don't know whether campaigns is too strong a word, but social media discussion about anything that appears to insult Chinese culture.
It is, yes. So over the past few years, we have seen Chinese consumers increasingly harnessing their rising spending power. for nationalistic causes.
So anything that they perceive as insults to Chinese culture or threats to national interest, they call for boycotts.
And in the past, they have managed to successfully hold boycotts against really big Western brands.
And we've seen an impact of these boycotts on these brands' sales.
Give me some examples of this having happened before.
So in 2021... They organized a boycott against H&M and other Western brands after these companies expressed concerns about human rights abuses in Xinjiang.
H&M was removed from Chinese e-commerce platforms and they saw their sales in China slump in the months after the boycott.
Okay, so H&M, Nike, Adidas have all been Western brands that have been subject to this.
Uniqlo is another one, Japanese company.
Yes. There was another prominent example of Dolce & Gabbana. also being boycotted after they showed a Chinese model eating Italian food with chopsticks. the effects of that boycott, even now years after that whole thing, the whole fiasco came about,
The brand's name remains soured in China.
It's still trying really hard to win back Chinese consumers.
That's interesting. So as soon as a brand becomes tarnished in some way, can have a really long term... impact on that company's ability to sell in China.
Exactly, yes. And even with this Swatch boycott, as people are calling for boycotts of Swatch watches.
They're also bringing back Dolce & Gabbana.
They're warning people that if you cross Chinese national pride, you could end up like this Italian brand.
So that's an interesting story that's very well read on the BBC website today, bbc.com.
If you'd like to know more, Jane Sydenham from Rathbones Investment Management still with me.
Any discernible effect on swatching the markets, Jane?
Yeah, I mean, the share price is down about 3.5% today.
So it clearly hasn't gone down well. And these cultural sensitivities are so important for global brands.
They really do need to check their thinking in every market.
I mean, it's interesting, you know, the shares haven't been doing particularly well and they're sort of halved since 2023.
I mean, there are other reasons behind that. but it just doesn't help them at a sort of difficult time.
So it really is important not to damage the brand.
I mean, there are other... examples in history of Western companies that have misjudged advertising and messages.
And just checking those sensitivities is so important.
Let's talk about the main stock index in China, which has closed at its highest level in a decade.
I mean, it's really interesting. You know, the Chinese economy has been going through a pretty... tough time in the last few years.
The property market has sort of completely boiled over.
A couple of developers went bust. Some of the major developers leaving lots of empty flats and houses.
House prices have been down. Consumer spending has been etc.
So there's been lots of reasons why the Chinese market and economy has been under pressure.
But as time's gone on, investors get to a point where they sort of know the worst and they come to accept it.
And I think the US-China trade discussions also beginning to make the Chinese begin to, they're sort of starting to realise that actually their position their negotiating position relative to the US isn't quite as bad as perhaps people had thought it was.
We're starting to see some interest rate reductions in China.
There's a bit of stimulus going on. And so there's a whole series of things that are just starting to... to cause a change in attitude and an improvement, and that's been pushing the stock market up.
There comes a point where it looks too cheap, too oversold and everyone's too negative.
And suddenly you start to see recovery take place.
And that's what we're seeing. Jane, thank you.
Now to Bolivia, set to elect a non-left-wing president after nearly two decades of near continuous rule. by the incumbent Socialist Party according to preliminary election results.
Countries turn to the right, comes and experiences its worst economic crisis in years.
Let's hear from our South America correspondent, Ione Wells.
Rodrigo Paz Pereira of the Christian Democratic Party was a pretty surprised vote leader.
Opinion polls had suggested... that a totally different candidate, the businessman Samuel Doria Medina, was the frontrunner in this race.
So this has taken everybody by surprise.
His campaign focused a lot on redistributing funds away from central government. fighting corruption, his slogan, capitalism for all, not just for a few.
The right-wing Mr. Kuroga had briefly served as interim president before, and his campaign focused heavily on drastically shrinking the state. does seem from these early polls like this might spell an end to a long-running rule by the incumbent Socialist Party in Bolivia.
I think there are a couple of factors behind this.
One is the economy. The country is experiencing one severe fuel shortages, shortages of some food items, of foreign reserves.
There's high debt in the country, high inflation.
So a lot of people had expressed on the campaign trail that they were voting for change.
They wanted something different, even if they weren't particularly enthused by perhaps some of the alternatives.
Our South America correspondent, Ione Wells.
Online at bbc.com slash news. More about Qantas, more about Swatch. and also why a heatwave in the UK will impact on broccoli crops.
They're expected to be much smaller as a result of warm weather.
BBC.com slash news for more. From me, Andrew Peach, and the team here on World Business Report, thanks for being with us today.
Thanks for listening to the BBC World Service.
