Qantas to Launch Discount Air Carrier

[AIRLIFT]

SYDNEY, Australia (AP) -- Qantas Airways' new discount international carrier, Australian Airlines, should begin flying to six Asian cities in the third quarter of 2002, the new airline's chief executive says.

Initial services will be nonstop return flights from the northeastern tourist city of Cairns to Osaka, Nagoya and Fukuoka in Japan as well as to Singapore, Taipei in Taiwan and Hong Kong, Australian Airlines CEO Denis Adams said.

The only major hurdle yet to be cleared is approval of the new airline's cost structure by Qantas CEO Geoff Dixon. Adams said he was confident of getting the approval early next year.

"The simplicity of the Australian Airlines model enables us to save significant costs compared to more traditional airlines,'' he said. "We have one aircraft type and one class of service.''

He said negotiations were currently underway with unions on wages, conditions and work practices.

"Provided these are concluded satisfactorily, we will be in a position to commence flying around September next year,'' he said.

The new carrier will be wholly owned by Qantas, but will have separate management and will operate independently.

Headquartered in Sydney, Australian Airlines will start operations with four Boeing 767-300 aircraft, building to a fleet of 12 767-300s.

Australian Airlines would eventually fly to every Australian mainland state, Qantas said in a statement.

Adams said the airline would also provide important international growth for the Qantas group.

"Australian will not fly on any routes against Qantas,'' he said. "Our job will be to create profitable flying on routes Qantas has withdrawn from or on routes from where Qantas has been unable to extract a satisfactory return.''

It seems to be me every airline in the world will have it's own discount air service pretty soon...

[wawoftam]

Does anybody honestly think that Australian will not fly on routes served by Qantas. Here's a scenario, Qantas stops flights on Monday and Aust starts Tuesday. (Since Q nolonger services that route). AIPA may want to look long & hard @ this.

[MT Edelstone56]

The Chinese whispers at AWAS.Very experienced and non-unionised crews and the successful Impulse employment models.
Yes,I think AIPA should look at this very closely!

[apacau]

AA will take over some routes that QF currently fly (eg: CNS-KIX). What they have said is that they will not fly concurrently on the same route.

Another thing, just listening to the world today on the ABC, a few more points have come up:

- Planes will be ochre coloured "from tip to tail" (!!)
- All economy 767-300s will only have 6 F/As as opposed to the 9 currently on QF int'l services (they claim they can cut staff costs by over 25%).
- Maintenance may well be done overseas with SIN, TPE and AKL currently under consideration

[kuldalai]

Other info extracted from official QF Press Release gives hope for job opprtunities perhaps for surplus AN MkI staff (interesting QF emphasis on Young Australians):

Australian Airlines Takes Off
Sydney, 11 December 2001 :

Chief Executive of Australian Airlines, Mr Denis Adams, said the airline would be a single class, full service leisure carrier.

The initial services will be non-stop return from Cairns to Osaka, Nagoya, Singapore, Taipei, Hong Kong and Fukuoka.

"We will have one aircraft type and one class of service.

Mr Adams said Australian Airlines had the potential to provide thousands of jobs for young Australians in an industry undergoing massive change.'

Australian Airlines would:

- Locate its first operational base in Cairns;
- Commence operations with four Boeing 767-300 aircraft, building to a fleet of 12 767-300s;
- Offer connecting flights between Cairns and the Gold Coast, six times a week;
- Be headquartered in Sydney and establish a second base to Cairns in a southern capital city;
- Establish a national presence as quickly as possible and eventually fly to every Australian mainland capital including Perth and Darwin.

"Australian will not fly on any routes against Qantas. Our job will be to create profitable flying on routes Qantas has withdrawn from or on routes from where
Qantas has been unable to extract a satisfactory return," he said.

Australian Airlines would join the Qantas Frequent Flyer program and would seek membership of the oneworld™ alliance through Qantas.

"We look forward to working with all the States as we expand over the next two years."

Issued by Qantas Public Affairs (a200101)

[farrari]

where is KIX?

[FullScale]

You guessed it!

The lashings will continue...Until morale improves

[Three Bars]

KIX = Osaka (Kansai)

[PPRuNeUser0161]

Look out boys, here it comes. The big axe! No way can QF continue as is against the current players. I think you'll see the recruitment program change names from QF to AA real soon.

[Loc-out]

Hang on, lets look at this another way.

Can someone inform me why the hell it has taken so long for Qantas, to name just on one airline, to offer the public cheaper afares.

Is the answer 1/ the public have been ripped off for years or 2/ they didn`t realise until now, fares could be made cheaper?

[SixDemonBag]

You can always do things more efficently. The consequence is the possibility of a loss of jobs to the companies lost through the natural selection process (take a look around), reduced working conditions and wages (take another look), and reduced service (inflight, etc). It's been said before, you get what you pay for, and it't the mentality of 'we have been ripped off for years' that is going to bite our industry in the bum. But that's life.

By the way, my 2.2 cents worth is that would it not be good to see current QF drivers seen flying these planes? If anything it could save money for QF in the long run, be a good marketing tool, and aviod a heap of industrial action (that we see other sections in the company are contemplating already) and ensure that the erosion of working conditions are halted for future pilots. I know I'll get the usual QF bashers (wannabes?) out in force, but hell, I could have said 'wasn't it a lovely day', and someone will reply...'Die QF die!

And..I'm sorry for any bad spelling, grammar, etc....

And, I have nothing against any religion or sexual orientation...

Have I covered all bases?

[ 11 December 2001: Message edited by: SixDemonBag ]

[ernestkgann]

Does anyone have any idea how they propose to staff the new airline. Would it be a contract/direct entry type affair or are current QF drivers going to fill the slots?
I had heard that there was a bit of a rush on amongst the boys for transitions to the 767 in preparation for commands etc in the new QF.
I imagine that the wages would be somewhere in between Virgin and based SQ guys giving some recognition to wide body and international experience.

[ground_hog]

Good questions all Ernest, but I wonder if this will be like anything done before. Take a look at similar operators like bRyan Air and at best you can only hope for a fair wage and/or contract. Have a look at some of the stuff they have come out with in their latest contract since 09/11 (if what has been posted is fairdinkum!!).

Low fares = low costs = lowest possible wages people will sell their soul to work for. Hopefully it won't be that harsh, particularly if they are drawing experienced crew from Qantas mainline, s'pose it depends on how much those guys want to jump the command queue. The only problem is if you do take the money/conditions just for the command, and it turns out to be not so good, where in Aus can you go to make it better after you are tired of being flogged? Money isn't everything, I know, but it sure helps ease the pain. Or is this just another reality check and this is all the job is worth!

[MT Edelstone56]

SixDemonBag,
how could using current QF crews be good publicity for Australian Airlines?

I think you have a rather inflated view of yourself.

No offence but 2.2 cents of naivety.

[SixDemonBag]

Naivety?...are you still bitter about what I said to you on the other thread, re slow 767's?

Look, it's a case of public perception. Qf getting as many people from it's mainline to crew the new airline would mean jobs for 'Dunnundarians' (whether they are cabin, tech, or ground crews). I don't see where you took offence

I don't feel wanting the best for my collegues is a case of naivety. I'm sure you would want the same. Try show some maturity when attempting to take cheap shots, son.

...what did I say about those Qf bashers, didn't you read the fine print?

[Wirraway]

Wed "Sydney Morning Herald"

Time to cut out the luxuries

Qantas is a great asset, but one British Airways can't afford, writes Elizabeth Knight.


That pesky rumour about British Airways selling its 22.5 per cent holding in Qantas just won't go away.

This time The Times in London reignited the story with quite a strong piece yesterday stating that British Airways was considering a £1 billion ($2.79 billion) rights issue to be unveiled in February.

It said that part of the BA restructuring would include selling its stake in Qantas.

The Qantas share price was slapped the second this story appeared on the wires. It closed down 12c at $3.88.

BA chief Rob Eddington earlier this week denied speculative reports in the weekend British press that there would be large job cuts associated with the airline's restructuring.

Qantas just hovers around repeating to analysts BA's official line that it would like to hold on to its Qantas stake.

And this is clearly true. It is one of the most valuable assets on the BA books. It earns money, which is more than can be said for most of the BA's other assets.

In a perfect world - or even in a normal world - this kind of investment is the perfect accessory to the partner relationship between the two airlines.

But Qantas is a luxury BA can ill afford. It's like holding onto the Cartier watch when the children are starving.

So it's no surprise BA is considering both a rights issue and selling its stake in Qantas.

The £400 million sale of the Qantas holding won't go near to getting BA out of its pickle but would help pay interest costs for a while.

Let's not forget, BA is £6.5 billion in debt and just lost $US75 million ($145.8 million) in the quarter.

While it might suit Qantas and BA to dismiss the latest reports as mere speculation, this scenario is entirely plausible.

Qantas doesn't like all this chat because it places an overhang on the stock which will clearly stay around until February when Eddington finishes his review and tells the investment community just how he is going to get BA out of its current mess.

In the meantime, Qantas continues to revel in the misfortunes of the rest of the Australian and overseas aviation industry.

Its information machine doesn't want to appear too cocky about how much money it is making from Ansett's demise but Qantas is probably the only airline in the world whose core profits will rise in the current year.

And moving into the future, Qantas has finally agreed on the launch of its budget airline, Australian Airlines, to start operating around September/October next year.

Ian Myles from Macquarie says Qantas is looking for a cost base 25 per cent below that of its existing airline.

Indeed, it's easier to start a Virgin than compete with one with the existing Qantas cost structure.

The first bit of saving will be increasing the number of seats on the plane. The next trick is to cut 20 per cent from staff costs.

Fuel costs should have fallen to a more comfortable level by late next year. Just the time to start a new airline. Of course the idea comes from the European low-cost airlines that have been so successful.

Myles says the Europeans achieve earnings before interest and tax of 25 per cent.

He contends that if one assumes a load factor of 80 to 90 per cent and yields 15 per cent below the normal level of Qantas, the Australian Airlines model could be looking at revenue of $80 million to $90 million. This would add $15 million to $25 million to the Qantas EBIT line.

Of course there would be some cannibalisation of the existing Qantas network, which has a higher yield. But the new airline should theoretically be more profitable because of its higher margin.

This is the time to experiment. Qantas has 90 per cent of the domestic aviation market and because the rest of the industry is in crisis can take advantage of cheaper aircraft and a potentially more flexible workforce.

The move by Chris Corrigan at Lang to take a position in Ansett is a play on reducing the airline's cost base by changing work practices. This was his modus operandi at the waterfront and it has been very profitable. Gaining Ansett assets through Virgin/Lang would be a threat to Qantas but would be less daunting if Qantas could counter the Virgin offer with its own low-cost airline.

Lang remains a long shot but is not yet out of the equation.

[proplever]

Bulldog, I have no idea who you are, and nor do I care. But I do have to read your posts, and let me say that I'm appalled.

You have exposed yourself as an illogical, bitter, twisted, malicious individual who will "QF bash" regardless of the thread, topic or situation. QF, despite your rantings, is as the SMH suggests, the "Cartier" of the airline world at present. Whether you like it or not.

I would suggest to you sir, that you are where you belong.

[Sly'n Smiley]

Bit of a sore point Proplever? I re-read Bulldogs posts (above) several times and could find anything too nasty. The reality is that there are currently a couple of hundered very experienced airline pilots who have significant operational exposure to SE Asian operations and the B767 who would love a job at Australian Airlines, me included. Wouldn't it also be good public relations to employ a swag of ex-AN drivers,mmm6DB? Unfortunately, the interests of junior QF pilots(promotion) are opposed to the interests of Bulldog69 and myself(a job), hence the animosity. If I was offered a job at Australian Airlines at a discount to the current QF long haul contract, I would sign. And I know aboubt 160 ex-AN B767 pilots who would too.

[Thunderbox]

It's pretty obvious from some of the posts here that there are a lot of drivers with ambitions for AA, especially ex AN 76 guys.

Why do you blokes think you deserve an instant command or F/O slot in Australia, just because AN went tits up. Is starting on the bottom of an outfit beneath you? Maybe Virgin won't look at you because of past form.

Instead of threatening to undercut the going rate, why not swallow your over inflated self-opinions and try starting on the bottom of a list for once, instead of white-anting the profession as so many did a decade ago.

At least you've given A.I.P.A. a heads up on your intentions, they'll know where your coming from...forewarned is forearmed etc.

[Keg]

Wow, I can't believe that i'm about to turn this into a partial '89 thread but I'm like a moth to a flame on this one.

Sly, I guess all those AN drivers prepared to fly AN at a discount are just 'doing it for their families'. Now where have I read that before!!

Interesting times.