Qantas confirms 5000 job cuts, loss of $A252m UPDATED
Qantas has confirmed it’s axing 5000 jobs in a bid to cut costs after posting a $A252 million loss in the six months to December 31.
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 facilities.
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 $A2 billion by the 2016/17 financial year as it tries to return to profitability.
The shares fell 10c, or almost 8%, to $A1.17 on the ASX following the announcement.
Chief executive Alan Joyce says the loss is “unacceptable” and tough decisions have 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," he says.
"We will cut where we can in order to invest where we must... we will be a far leaner Qantas group."
It has been reported each job in Qantas costs $A100,000 a year – far more than any airline it competes with.
However, Mr Joyce also blames Qantas’ plight on its competitor, Virgin Australia, which has the backing of Air New Zealand, Etihad Airways and Singapore Airlines, which he says creates an “unlevel playing field.”
"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 $A300 million in Virgin Australia...that capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses."
As part of its bid to save costs, Qantas will cut capital expenditure by $A1 billion over the next three years. It will also hand back its Brisbane Airport lease for $A112 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 Boeing 747 jumbos to be retired early and orders of new superjumbo A380s and Dreamliner 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 continues to face tough conditions, though he indicates the airline remains 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.
No immediate effect will felt on the New Zealand operations of either Qantas or Jetstar.
Despite company no comments, Qantas is expected to slash thousands of jobs for baggage handlers, engineers and security guards as it slashes $A2 billion of its costs.
Qantas chief executive Alan Joyce will announce the details when the company reports an anticipated $A300 million six-month loss to the Australian Stock Exchange for the six months to December 2013.
Some reports say up to 5000 of the airline’s heavily unionised 33,000 jobs are set to go – a figure the company has preveiously denied –and the airline is also expected to sell its long-term lease at Brisbane airport.
In its biggest ever operational shakeup, major changes will be made to international routes, including the Dubai-London leg of the “kangaroo route” now run in an alliance with Emirates.
The reports also say Qantas will retire its Boeing 747 planes earlier than expected, with the last to take off early next year. Other aircraft will also be taken out of service this year, ahead of schedule.
Senior pilots will be offered redundancies or retrained and redeployed on smaller aircraft on less pay.
Other moves expected today are a proposed to lift legal restrictions on overseas ownership, a government-guarantee for debt borrowings and a pushback in new aircraft orders.
More Queenstown flights
Meanwhile, in a piece of good news, Qantas has announced it will boost its Sydney-Queenstown service during the coming winter months. The existing three times weekly service will increase to five from April 7 to May 2; four times from June 6 to July 2; and daily from July 4 to October 24