Qantas to cut 1,000 jobs as losses mount
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Qantas has announced plans to slash 1,000 jobs, as it braces for a major loss in the second half of 2013.
In its latest market update, the Australian carrier forecast a pre-tax loss of AU$250-300 million (US$226-271m) for the six months ending 31 December 2013, due to what it called “a marked deterioration” in the passenger business.
The airline’s group CEO, Alan Joyce, said the situation demanded “urgent action”, with Qantas now planning to accelerate its cost-reduction programme, including more job losses and a pay freeze.
“We will do whatever we need to do to secure the Qantas Group’s future,” Joyce said. “Since the global financial crisis, Qantas has confronted a fiercely difficult operating environment – including the strong Australian dollar and record jet fuel costs, which have exacerbated Qantas’ high cost base.”
He went on to cite the government support offered to international airlines operating to Australia, and the “massive financial backing” received by Virgin Australia from its international partners as causes of Qantas’ problems.
“This foreign government capital has been used to finance dramatic increases in domestic capacity, with profound implications for the future of Australia’s aviation industry. In November, Virgin signalled its intention to continue its strategy, which is designed to weaken Qantas in the domestic market, with a AU$300m-plus injection from its foreign owners.
“The uneven playing field in Australian aviation is being tilted further,” Joyce added.
As a result, Qantas now plans to expand its cost-reduction programme, in an effort to save AU$2 billion over the next three years. Measures will include the reduction of at least 1,000 jobs within the next 12 months, a pay freeze including no bonuses for Qantas executives, a review of spending with suppliers and “network optimisation and improved fleet utilisation”.
“We have reduced the group’s unit costs, excluding fuel, by a total of 19% since FY09, including by 5% in FY13. But these actions are not enough to deal with the current situation,” Joyce said.
The airline will also launch a major review to identify structural changes that could boost its performance, with Qantas saying that “no options will be excluded from the review”.
Qantas posted a pre-tax profit of AU$192m in the 12 months to 30 June 2013.
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