Thurs "West Australian"
Qantas prepares for war with cuts
By Geoffrey Thomas
QANTAS will lay off up to 2500 staff as part of a wartime contingency plan that the airline is expected to outline when it unveils its interim profit today.
The company refused to comment on reports of the cull, which would involve paring its workforce by 38 per cent to deal with the travel downturn that would be caused by a war.
But a Qantas spokesman said: "We have contingency plans for the inevitable downturn in travel that would follow a war in Iraq.
"These plans take in a variety of scenarios and will depend on the circumstances at the time."
The airline expects passenger volumes to slump 20 per cent if the war is protracted but analysts say this would be offset by the expected collapse of United Airlines, which operates from Los Angeles and San Francisco to Sydney and Melbourne.
US analysts claim United will almost certainly collapse if the Iraqi war starts in two weeks, as expected.
United has already withdrawn from the Auckland-Los Angeles route, leading to Air New Zealand shifting all its capacity from the Sydney-Los Angeles routes and redeploying to cover United's withdrawal.
The total effect of United's collapse would be an additional five flights a day to be operated to the US by Qantas.
Analysts in Asia say Cathay Pacific's contingency plans call for a 20 per cent cut in flights while Singapore Airlines plans to park a "significant number" of its fleet.
Qantas is already experiencing some slackness in forward bookings with speculation of the war mounting.
To provide some perspective on its assessment, the airline said it would have needed to lay off 8500 staff after September 11, if it had not been for the collapse of Ansett in the same week. In the six months to December 31, 2001, Qantas lost $15 million before interest and tax from its international operation, compared with $285.9 million profit in the same period a year earlier.
An Iraqi war will have the double impact of an increased threat of terrorism, which is sure to hurt travel.
Qantas may outline a series of options today which will include staff taking leave and leave without pay.
The airline is also understood to have plans to rapidly switch its fleet to destinations well away from the conflict area.
A positive for the airline is that travel within Asia has been mainly unaffected by September 11, but this is also an area where Qantas is at a significant cost disadvantage against Asia-based airlines.
It is likely that Qantas will accelerate its expansion plans for its lower cost Australian Airlines operation with flights starting from other cities, other than Cairns.
The airline had indicated that Perth-Bali flights with 767s were an option for Australian Airlines.
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