War footing: Qantas cuts jobs
 

March 18, 2003

QANTAS Airways today confirmed it will cut an additional 1000 full-time equivalent jobs through its forced leave program in the face of a war against Iraq.

Forecasts predicted that global air traffic could fall between 5 and 20 per cent because of a possible war.

In February, Qantas said it would reduce staffing levels by the equivalent of 1500 full time employees as international tension slows demand.

The new equivalent job cuts are in addition to that February announcement.

Qantas chief executive Geoff Dixon, in an internal memo, said the airline had already introduced a range of measures, including reduced flying and a freeze on capital expenditure, discretionary expenditure, overtime in non-operational areas and the hiring of new staff.

"We also have the accelerated leave program to reduce staffing levels by the equivalent of 1500 full-time staff over three months," Mr Dixon said.

"We now intend to increase the accelerated leave program to temporarily reduce staffing levels by an additional 1000."

The airline has said it would use accumulated annual and long service leave entitlements to help reduce staffing over the coming months.

Mr Dixon said other measures might be necessary if booking patterns changed or war broke out, as was increasingly likely, in Iraq.

"This will involve permanent staff reductions by not filling vacant positions created through the non-hiring policy," he said.

"Other initiatives are under consideration."

Mr Dixon has previously said redundancies could happen as a result of a downturn from a war in Iraq.

In February he said that Qantas forward bookings were down 6 per cent across the board, and could fall by up to 15-20 per cent if there was a war with Iraq.

Mr Dixon today added more people were showing a reluctance to travel in the existing environment, given the fear of terrorism, the prospect of war, as well as from poor economic conditions in many countries.

"This is showing up quite clearly in forward bookings for all airlines, including our own," he said.

"As I have emphasised many times in the past, Qantas – despite its better financial performance relative to most other airlines – is not immune from any of the industry's problems."

Mr Dixon said Qantas was very conscious of the impact of such measures on individuals and families but were aimed at ensuring the long term viability of Qantas, job security for the great majority of the 37,000 staff.

Australian companies are expected to endure a profit slowdown towards the end of 2002/03 – especially if war breaks out – despite many having enjoyed a strong first half.

Companies linked to the housing and construction market plus those in the media sector were the stand-out performers during the recent half year profit reporting season which ended on Friday.

A survey by Commonwealth Securities of 196 listed companies which released their earnings for the six months to December 31 found that 71 per cent recorded a net profit rise, with the average rise being 17 per cent.

However, market watchers expect a slowdown the second half of the year amid fears of a war in the Middle East and continuing weakness on global investment markets.

Mr Dixon said a recent report by the United States Air Transport Association stated a war would put the US airline industry at risk of collapse.

US Airways and United Airlines have already sought Chapter 11 bankruptcy protection, Continental Airlines has announced it will report a loss for the year and Delta Air Lines last week forecast negative cash flows this quarter, the report noted.

The report estimates that a war in Iraq could increase US airline industry losses for the year to $US13 billion ($22.07 billion), taking US airline industry losses since September 2001 to about $US25 billion.

The report also estimates an additional 70,000 to 98,000 US airline jobs would be lost if there was a war – on top of the 110,000 US airline jobs and 100,000 US aircraft manufacturing jobs that have already disappeared since September 2001.

Since September 2001, the global aviation industry has shed about 400,000 jobs, including about 200,000 airline jobs, it added.

Both the Transport Workers' Union and the Flight Attendants' Association of Australia commended the airline's approach.

"We met with the company last week and they explained their leave program to us and at this stage it's a purely voluntary arrangement," TWU national secretary John Allan said.

"We're quite satisfied with the strategy Qantas is putting in place to deal with the Middle East problems."

The airline had promised to talk further with the union if it decided to make the leave compulsory, Mr Allan said.

Virgin Blue Airlines spokeswoman Amanda Bolger said despite the outlook for war the Australian domestic airline remained on track for launching international services later this year.

The first international services were likely to go from Australia to leisure destinations like Bali, Fiji and Vanuatu and then trans-Tasman to New Zealand.

Regionally, Singapore Airlines and Air New Zealand have no current plans to follow a lead by Qantas to reduce staffing levels in anticipation of the effects of a war in Iraq.

But the airlines are making contingency plans regarding route changes and to give passengers flexibility to adjust travel plans in the event of any conflict in the Middle East.

Airlines are also maintaining high airport security measures.

AAP