Qantas will axe 5000 jobs in a bid to dramatically cut costs
after posting a $252 million first half loss.
Over the next three years, Qantas will shed 1500 management
and non-operational positions, with the remainder of the job
cuts to come from changes to the fleet and network and the
restructure of maintenance operations and catering
Meanwhile, wages for all employees will be frozen and the
company's executives have already taken a pay cut.
The airline is attempting to save $2 billion by the 2016/17
financial year as it tries to return to profitability amid a
bitter, profit-draining battle with rival Virgin.
Qantas shares fell 10 cents, or almost eight per cent, to
$1.17 following the announcement.
The announcement comes as the federal government weighs up
the possibility of supporting the airline through a debt
guarantee or changes to the Qantas Sale Act.
Chief executive Alan Joyce said the $252 million underlying
loss for the six months to December 31 was unacceptable and
tough decisions needed to be made.
"There are many Australian companies that have failed because
they were not prepared to make the hard decisions, Qantas is
not one of them," Mr Joyce told reporters in Sydney.
"We will cut where we can in order to invest where we must...
we will be a far leaner Qantas group."
"Our priorities are to protect our core businesses... that is
how we will protect as many jobs as possible and return to
Mr Joyce said he would meet with unions on Friday to discuss
He put much of the blame for the result on an "uneven playing
field" with Virgin, which has the backing of three foreign
airlines - Etihad, Singapore Airlines and Air New Zealand
among its owners.
"The Australian domestic market has been distorted by current
Australian aviation policy," he said.
"Late last year, these three foreign airline shareholders
invested more than $300 million in Virgin Australia.... that
capital injection has supported continued domestic capacity
growth by Virgin Australia despite its growing losses."
The amount of capital Qantas can access from foreign sources
is restricted by the Qantas Sale Act.
As part of its bid to save costs, Qantas will cut capital
expenditure by $1 billion over the next three years.
It will also hand back its Brisbane Airport lease for $112
million, though it will retain exclusive use of most of
northern end of terminal until 2018.
Meanwhile, the airline says more than 50 aircraft will be
deferred or sold, with older planes like 747s to be retired
early and orders of A380s and B787-8s to be delayed.
It will also axe underperforming routes including its Perth
to Singapore service, while timing and aircraft changes will
be made to other routes.
Mr Joyce also announced Qantas would suspend the expansion of
the Jetstar Asia business in Singapore, which continued to
face tough conditions, though he indicated the airline
remained committed to finding opportunities in Asia.
"Jetstar has been a pioneer Australian brand across Asia and
we continue to see major opportunities for it in the world's
fastest growing aviation region," he said.