lame
26th May 2004, 06:15
Wednesday May 26, 1:15 PM
Australia's Qantas May Move Some Ops Offshore -CEO -2-
CANBERRA (Dow Jones)--Qantas Airways Ltd. (QAN.AU) Chief Executive Geoff Dixon said Wednesday the airline may move some operations offshore to keep costs down as fuel prices hover near record highs.
But Dixon was quick to concede that there are no plans to subcontract work.
"There are no specific plans at the moment, each of the various business units in Qantas have a job to reduce their costs and to find the best ways to do business," he said.
"At the moment they're looking at a range of issues, a decision on whether we put any jobs offshore - any more jobs offshore, obviously we've got a small percentage now - will be made when it comes to the executive," Dixon said at the National Press Club in Canberra.
It's not the first time, Dixon has flagged moving jobs offshore.
In November 2001, he warned Australia's biggest airline may move some operations overseas if unions reject revised pay and work conditions comparable to those at domestic rivals Virgin Blue Holdings Ltd. (VBA.AU) and the now defunct Ansett Australia.
Dixon's latest comments may be directed toward unions, with talks about staff wages and working conditions slated for next month.
Around 94% of Qantas' 35,000 strong work force is based in Australia, a much higher percentage of home grown employment than its major competitors, Dixon said.
Asked about his own tenure at Qantas, Dixon said that was "up to the board" to decide, noting Delta Air Lines Inc. (DAL) recently appointed a 70 year-old chief executive officer and gave him a five year contract.
He also mentioned that Boeing Co. (BA) just appointed a 69 year-old, also with a five year contract.
"I'm going to hang around for a while," Dixon said.
Despite Qantas' recently introduced passenger fuel surcharge and some hedging in place to offset rising fuel prices, the group expects its fuel bill this year to be up on last year's.
"We anticipate even with the hedging we'll have around about A$280 million more in fuel costs alone, not on activity just on cost.
"And that's why we have put a surcharge in and the surcharge will go a long way to meeting most of those other requirements," Dixon said.
Dixon once again voiced his disapproval about the Qantas Sales Act, which limits foreign ownership to 49%. Under the act, no single foreign entity can hold more than 25%, while foreign airlines as a group can't own more than 35%.
"These constraints limit our ability to access equity capital in global markets, and therefore serve to increase our cost of capital," Dixon said.
"By increasing our cost of capital, the Qantas Sale Act makes it more difficult to justify investments for growth on the scale we want and need. This is a brake on us, and quite simply a brake on investment in creating Australian products, services and jobs," he added.
Asked if he had approached Prime Minister John Howard or Transport Minister John Anderson recently about repealing the act, Dixon said: "I haven't raised it with either the PM or John Anderson in recent times...
"I don't think anything will happen before an election, I don't even know if we'll bring it up anymore before an election," he added.
Separately, Dixon expects Qantas' international budget offshoot to commence operations at the end of the year, possibly in November.
"We're still very confident that the airline will be up and running as I said before at the end of the year, possibly by November," he added.
Qantas will hold a 49.9% stake in the yet-to-be-named carrier, while Singapore's state-owned investment company, Temasek Holdings Pte. Ltd., will own 19%. Singapore businessmen Tony Chew and F.F. Wong will own 21.1% and 19%, respectively, of the airline.
While the airline, which will be based in Singapore, hasn't officially been named, Dixon is hoping it will be christened, Jetstar.
Australia's Qantas May Move Some Ops Offshore -CEO -2-
CANBERRA (Dow Jones)--Qantas Airways Ltd. (QAN.AU) Chief Executive Geoff Dixon said Wednesday the airline may move some operations offshore to keep costs down as fuel prices hover near record highs.
But Dixon was quick to concede that there are no plans to subcontract work.
"There are no specific plans at the moment, each of the various business units in Qantas have a job to reduce their costs and to find the best ways to do business," he said.
"At the moment they're looking at a range of issues, a decision on whether we put any jobs offshore - any more jobs offshore, obviously we've got a small percentage now - will be made when it comes to the executive," Dixon said at the National Press Club in Canberra.
It's not the first time, Dixon has flagged moving jobs offshore.
In November 2001, he warned Australia's biggest airline may move some operations overseas if unions reject revised pay and work conditions comparable to those at domestic rivals Virgin Blue Holdings Ltd. (VBA.AU) and the now defunct Ansett Australia.
Dixon's latest comments may be directed toward unions, with talks about staff wages and working conditions slated for next month.
Around 94% of Qantas' 35,000 strong work force is based in Australia, a much higher percentage of home grown employment than its major competitors, Dixon said.
Asked about his own tenure at Qantas, Dixon said that was "up to the board" to decide, noting Delta Air Lines Inc. (DAL) recently appointed a 70 year-old chief executive officer and gave him a five year contract.
He also mentioned that Boeing Co. (BA) just appointed a 69 year-old, also with a five year contract.
"I'm going to hang around for a while," Dixon said.
Despite Qantas' recently introduced passenger fuel surcharge and some hedging in place to offset rising fuel prices, the group expects its fuel bill this year to be up on last year's.
"We anticipate even with the hedging we'll have around about A$280 million more in fuel costs alone, not on activity just on cost.
"And that's why we have put a surcharge in and the surcharge will go a long way to meeting most of those other requirements," Dixon said.
Dixon once again voiced his disapproval about the Qantas Sales Act, which limits foreign ownership to 49%. Under the act, no single foreign entity can hold more than 25%, while foreign airlines as a group can't own more than 35%.
"These constraints limit our ability to access equity capital in global markets, and therefore serve to increase our cost of capital," Dixon said.
"By increasing our cost of capital, the Qantas Sale Act makes it more difficult to justify investments for growth on the scale we want and need. This is a brake on us, and quite simply a brake on investment in creating Australian products, services and jobs," he added.
Asked if he had approached Prime Minister John Howard or Transport Minister John Anderson recently about repealing the act, Dixon said: "I haven't raised it with either the PM or John Anderson in recent times...
"I don't think anything will happen before an election, I don't even know if we'll bring it up anymore before an election," he added.
Separately, Dixon expects Qantas' international budget offshoot to commence operations at the end of the year, possibly in November.
"We're still very confident that the airline will be up and running as I said before at the end of the year, possibly by November," he added.
Qantas will hold a 49.9% stake in the yet-to-be-named carrier, while Singapore's state-owned investment company, Temasek Holdings Pte. Ltd., will own 19%. Singapore businessmen Tony Chew and F.F. Wong will own 21.1% and 19%, respectively, of the airline.
While the airline, which will be based in Singapore, hasn't officially been named, Dixon is hoping it will be christened, Jetstar.