Qantas labels job cuts as speculation
The Age July 17, 2008 - 11:31AM
Qantas has labelled claims in media reports that it is about to axe 2,000 jobs worldwide in a bid to offset skyrocketing jet fuel prices as "pure speculation".
Following an internal email issued to Qantas staff this week, reports in News Ltd papers suggested that the national carrier will slash up to 2,000 jobs next week, or about five per cent of its 36,000 strong workforce.
No work sections were expected to escape the cuts, the reports said, including senior management.
The airline is also expected to announce cuts to loss-making flight routes from both domestic and international schedules.
A Qantas spokesperson declined to comment on the job cuts, describing the reports as "pure speculation".
The spokesperson confirmed that chief executive Geoff Dixon had issued a message to staff on Tuesday in which he indicated that the results of an in-depth business review of the Qantas group would be released next week.
"The continuing increase in the price of oil has necessitated a further in-depth review of all aspects of the Qantas Group, particularly how our flying business will operate in this new cost environment," Mr Dixon wrote in the email.
"We undertake this review with some reluctance - knowing full well the effort put in and the changes accepted by all of us at Qantas over the past 10 years.
"However, the facts are that oil prices staying at over $US140-plus a barrel has changed forever the way we do business."
Overnight, oil prices settled sharply lower falling $US4.14 to $US134.60 a barrel on the New York Mercantile Exchange. The drop follows a $US6.44 sell-off Tuesday.
The two-day slide of $US10.58 a barrel marks a dramatic turnaround in crude prices, which as recently as Friday traded at record highs above $US147 a barrel.
But even with this week's sell-off, prices remain about 80 per cent above where they were a year ago.
Qantas and Jetstar's fuel bill will increase by more than $2 billion in 2008/09, representing around 35 per cent of the company's total expenditure.
Mr Dixon also wrote that he agreed with the comments of Emirates president Tim Clark, who said "this is the greatest crisis in aviation history" and that "the overall view of our industry is dire".
Mr Dixon went on to comment on the challenges of industrial action faced by Qantas.
"For Qantas the immediate issues facing the whole industry are being further exacerbated by the continuing industrial action by the ALAEA, the union representing 1,500 staff in Qantas Engineering.
"As you are acutely aware, this action is causing severe disruption to our network and services at a time when we can least afford it."
Centre for Asia Pacific Aviation executive chairman Peter Harbison said Mr Dixon's message suggested that the airline would focus more on its low cost offshoot Jetstar.
"I think the natural progression is to rely much more heavily on the lower cost-base Jetstar in this new environment."
Last month Qantas pruned about 100 staff and cut back capacity by five per cent - the equivalent of grounding six aircraft.
Virgin Blue has recently cut capacity by six per cent and announced a $50 million package of cost savings to help offset the effect of record jet fuel prices.
Virgin Blue is expected to unveil a second tranche of restructuring this week.