HOT OF THE PRESS
QANTAS announced today it was cutting up to 480 jobs by closing its heavy maintenance operations in Sydney, raising the prosect of severe disruption to next week's Commonwealth Games if unions follow through with threatened industrial action.
The airline said today the B747 maintenance operations would close in May and the decision follows a review of all its aircraft engineering operations.
Qantas chief executive Geoff Dixon said the airline planned to achieve savings of about $100 million a year from restructuring all of its engineering operations, principally through consolidation, process improvements and more flexible work rules.
Union reaction has not yet been announced but leaders have threatened potentially crippling industrial action with just days to go before the Commonwealth Games.
Mr Dixon said the review would initially mean Qantas invested in, and retained, its wide-body heavy maintenance facilities in Australia.
"A longer term commitment to retaining the operations in Australia will depend on Qantas achieving competitive benchmarks with the larger global Maintenance Repair and Overhaul providers (MROs) now dominating world aviation.
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"Retaining three wide-body maintenance facilities in Australia is no longer viable under this scenario. We have one chance to make this work and we are determined to succeed."
The Federal Government has warned Qantas that it considers it strongly in the national interest for the heavy maintenance operations to remain in Australia.
Mr Dixon said Qantas had to be competitive in every area in which it invested as the company moved towards a cost base that could ensure profitable operations with an oil price above $US60 a barrel.
He said the closure of the Sydney base would result in the loss of about 480 jobs.
"However, through re-deployment the number of people who leave the company as a result of this decision could reduce to around 340."
Mr Dixon said the review at Qantas Engineering would mean:
Heavy maintenance for Qantas' Boeing 747 fleet being transferred from Sydney to the airline's base in Avalon, Victoria, with an increase in employment opportunities at Avalon.
Heavy maintenance for the B767 fleet to continue at the airline's new purpose-built facility in Brisbane, also with increased employment opportunities.
A review in the next six months of the airline's narrow-body aircraft heavy maintenance operations, now out at Tullamarine in Melbourne.
An investment of about $50 million in infrastructure and technology to aid the restructuring.
Qantas Engineering seeking third-party work within the region when the restructuring was complete.
A commitment to retain a comprehensive apprentice program for the training of future aviation engineers in Australia.
Mr Dixon said the decision to close the airline's Sydney heavy maintenance base, after more than 55 years of operation, was regretted, but necessary.
"We have severe space limitations at Sydney and the limitations will increase in future years," he said
"Following this decision, we will still have more than 2900 people employed in engineering in Sydney as well as almost 18,000 Sydney-based staff in other departments.
"We would need to vacate by 2009, or 2010 at the latest, even if the Sydney base had provided the most efficient outcome for Qantas.