Ok, here is the original article:
Qantas Airways faces challenges with “strong parallels” to those that led to a brutal restructure of British Airways more than a decade ago, says former BA chief executive Rod Eddington.
Sir Eddington, who took the helm of BA in 2000, launched the transform*ational “Future Size and Shape” program. It resulted in the loss of nearly one-quarter of the airline’s 65,000-strong workforce over three years but helped return the carrier to profitability by focusing on its strengths as a full-service airline amid competition from budget rivals.
Qantas has already announced plans to cut 1000 jobs from its workforce of 33,000 this year. But it is expected to raise that number alongside the release of its half-year results on Thursday as part of a plan to cut costs by $2 billion over three years to better compete against Virgin Australia Holdings.
Scott Gustetter, a former Qantas network and strategy executive who heads aviation consultancy Aspirion, said the job cuts at the airline could approach 6000. “From a labour point of view you are going to see massive changes,” he said.
Sir Eddington said there were “some strong parallels between the challenges British Airways faced in 2000 and the challenges Qantas faces today”.
“The people of British Airways were able to confront those challenges, think through what needed to be done and actually implement the changes,” he told The Australian Financial Review on Monday. “That was the workforce as a whole.”
Many of the jobs were lost through natural attrition and the sale of non-core businesses, but there were also major cuts to the call centres and check-in staff through better use of technology. In addition, some employees such as flight attendants switched from full-time work to part-time in a move that helped avoid costly *redundancy payments. There were few strikes during that period.
By the time Mr Eddington exited BA in late 2005, annual earnings had grown to £450 million, up from a £62 million loss when he had arrived. “You can do it but it is difficult and you need to bring your people with you,” he said of the restructuring effort.
A bigger turnaround than American Airlines
Qantas chief executive Alan Joyce has said that cutting $2 billion of costs from the business over three years will represent proportionately greater cuts than those made by American Airlines during its recent Chapter 11 bankruptcy.
American Airlines cut 11 per cent of its 66,000-strong workforce over an *18-month period before it emerged from bankruptcy in December. The heaviest job losses were in engineering and *baggage handling.
Qantas, like other legacy carriers, is a complex business. The airline has 49 enterprise bargaining agreements with 16 different unions, which includes newer agreements that offer less generous terms than older ones.
Qantas has already been reducing staff at its mainline operations while growing its low-cost subsidiary Jetstar Airways. Employee numbers at its mainline business fell by nearly 1300 between June 2012 and June 2013 but remain above 25,000. Qantas’s mainline staff on average took 10 sick days last financial year compared with 4.7 for Jetstar staff. The total annual attrition rate is just 4.5 per cent.
Mr Gustetter said he expected cuts in call centre staff, engineering and the head office, with some positions lost altogether and others outsourced. Most call centre workers at Qantas are located onshore and some in New Zealand, whereas BA outsources to India.
In engineering, Qantas does the bulk of its heavy maintenance for its dom*estic fleet onshore even though the Qantas Sale Act only requires that for its international fleet. In contrast, Virgin does most of its heavy maintenance in overseas locations such as New Zealand and Portugal and has a far smaller *engineering staff. “I think that is *certainly an area susceptible to cuts,” Mr Gustetter said. “It is an unfortunate consequence of the competitiveness of the Australian labour force.”
He said cuts to the workforce *performing more routine line main*tenance at Qantas might also be made because for every three engineers checking a Virgin aircraft, there were typically six at Qantas. “That has to change,” he said.
Mr Gustetter said he also expected Qantas would retire ageing 767s and 747s more quickly than previously flagged in a move that could help lower fuel costs and the additional pilot and maintenance requirements of having a more mixed fleet.