Smell the coffee
Qantas set to axe more jobs
By Peter Smith in Sydney
Published: March 22 2009 22:11 | Last updated: March 22 2009 22:11
Qantas, the Australian flag carrier, will this week make public a restructuring plan that includes a second wave of redundancies after an examination of the airline’s business under Alan Joyce, its new chief executive.
Staff and unions will be told the job losses are needed to match reduced capacity requirements as passenger revenues have deteriorated.
Qantas will also announce the restructuring to the Australian Securities Exchange in the coming days, two people with knowledge of the situation said. Qantas declined to comment.
Airlines worldwide are being hit by the mounting crisis in aviation. Air France-KLM and Lufthansa, the two leading European carriers, recently announced more capacity reductions. A rising number of carriers is also seeking to defer delivery of new aircraft, undermining the outlook for jetmakers Airbus and Boeing.
The Centre for Asia Pacific Aviation, an industry consultancy, last week warned that airlines in Asia could only be weeks away from grounding up to 10 per cent of their fleets as they contend with weak revenues, falling passenger loads and excess capacity.
Singapore Airlines last week reported a more than 20 per cent drop in passenger loads in February, one of the airline’s biggest monthly drops on record, while Hong Kong-based Cathay Pacific this month reported the biggest annual loss in its 63-year history.
Qantas axed 1,500 jobs in July 2008 and has since introduced an “accelerated leave” programme to cut staff numbers. Many of this week’s cuts are likely to be made in senior and middle management. The fresh job losses continue Qantas’s strategy of reducing its workforce.
The airline announced the departure of David Cox, the executive in charge of engineering, on March 19. Qantas employs 37,000 people according to its latest annual report.
It reported last month a 68 per cent drop in first-half profits and reaffirmed guidance that full-year profits to June 30 would reach A$500m ($344m), down from 2007-08’s A$1.4bn.
The A$500m figure is vulnerable to a downgrade, however, possibly lthis week, as Qantas grapples with depressed demandl.
Mr Joyce, the former head of Qantas’s budget carrier Jetstar, lhas made it clear lhe wants the group to avoid la loss during his first yearl.
However, Mr Joyce has also signalled he wants to take a more conciliatory approach to negotiations with Qantas’s 16 unions than Mr Dixonl.
A lengthy and bitter dispute with the Australian Licensed Engineers Association last year cost Qantas A$150m. However, the dispute which resulted in flights being cancelled for often small technical problems also damaged Qantas’s brand image and its reliability record.
Qantas is one of the ore profitable airlines and, though it was recently downgraded by Moody’s, is one of the few to retain an investment grade credit rating.
In February, Qantas said its A$500m full-year profit guidance was “subject to no further significant change in market conditions and fuel prices”.