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View Full Version : Airline to slash $1bn in two years


penash
15th Aug 2003, 20:47
As Reported by AAP via news.com.au



QANTAS Airways has unveiled an ambitious restructuring program that creates three stand-alone businesses in an aggressive drive to slash operating costs by $1 billion in the next two years.

The revamp represents the airline's response to the current global economic downturn, Severe Acute Respiratory Syndrome, the Iraq war and success of discount carrier Virgin Blue, with 1200 of Qantas' 2000 targeted job reductions already affected and the remainder to occur through attrition.

Between 400 and 600 full-time jobs will switch to part-time, while a forced leave program in recent months has temporarily reduced staffing levels during the worst of the SARS crisis.

Qantas has identified three types of businesses to be created in the new look airline: flying businesses, flying services – including Engineering & Maintenance and Airports – and associated businesses such as Catering, Freight, Qantas Holidays and Qantas Defence Services.

The program will be launched immediately, with Qantas Catering selected as the pilot business segment.

In a message to staff, Qantas chief executive Geoff Dixon said the business would be reorganised to improve accountability, collaboration and leadership.

"Managing the amount of change needed at Qantas (and indeed any traditional airline in the world) has become a very complex task," Mr Dixon's memorandum said.

"Organisational structures set up under past conditions no longer can deliver the outcomes required in this new environment. Because of this, I have decided on a significant reorganisation of our company."

Mr Dixon said the stand-alone businesses would each have its own management and leadership.

They would operate under individual budgets and profit targets and be required to produce targeted returns on the assets allocated to them to optimise the performance of the whole Qantas Group.

Air New Zealand this week fired its first shot in a looming trans-Tasman price war, launching its discount carrier Tasman Express with fare cuts of up to 38 per cent.

Trans-Tasman competition is getting hotter, with dominant carriers Air NZ and Qantas also now facing fresh competition from Emirates, which recently began flying to Auckland from Dubai, building on its daily services from Dubai to Sydney and Melbourne.

Virgin Blue chief executive Brett Godfrey last week foreshadowed cuts of up to 40 per cent on some Australia-New Zealand fares, with Virgin likely to enter the arena by the end of October.

Air New Zealand said its lowest fare price would apply to at least a quarter of seats on all flights including business class, with fares to and from Australia to be cut by an average of 25 per cent.

Qantas has been seeking regulatory approval for its proposed $NZ500 million tie-up with Air New Zealand.

Today, Mr Dixon said he would personally oversee the changes, alongside a steering committee consisting of Peter Gregg, John Borghetti, Kevin Brown and David Forsyth. Michael Vodicka has been appointed to lead the program on a day to day basis.

"I am confident that this project, when fully established over the next 18 months, will greatly improve our performance in all areas, allow us to compete more effectively, protect jobs at Qantas and, importantly, deliver better service to our customers and more fulfilling jobs for our people," Mr Dixon said.

All the businesses will be supported by a corporate centre, including a shared services division that will provide information technology, human resources and financial services to each business segment.

Qantas has forecast a pre-tax profit for 2002/03 of about $500 million, down from $630 million the year before, with results due to be released next Thursday.

At 11.06am (AEST), Qantas shares were up 3c at $3.13.

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HZ123
17th Aug 2003, 19:01
All due respect but hardly any of this is new many airlines have been running these plans for many years. Long term it sorts out which sector is making the money and which needs to be out sourced. Catering must surely be out sourced as too might engineering leaving just the core airline in the end.

Some of you guys and girls looking for a long term career with QF may need to watch your baccks or make sure you get into the core business.