Qantas to cut jobs to stem losses

Qantas has been grappling with a string of natural disasters and surging fuel costs [AFP]

Australian airline Qantas has revealed plans to cut up to 1,000 jobs as part of a major revamp to stem financial losses.

Unions, accusing Qantas of outsourcing jobs, threatened strike action, but the airline said it needed “fundamental change” to its business model.

“To do nothing, or tinker around the edges, is not an option,” Alan Joyce, Qantas chief executive, told reporters.

Joyce has previously estimated the company’s international operations will record a loss of Aus$200 million before tax.

“Qantas International is a great airline with a proud history,” he said.

“But it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change.”

Joyce revealed a new five-year plan that includes the launch of two Asia-focused airlines, and 110 new Airbus planes.

The key objective of the plan was to return the airline’s international operations to profitability, he added.

Focus on Asia

As part of the focus on Asia, Qantas will strengthen its code-share partnership with British Airways, which will carry more passengers between Qantas’s Asian destinations and Europe.

Under the plan, Qantas will team up with Japan Airlines and Mitsubishi Corp. to launch a new low-cost domestic airline, Jetstar Japan, by the end of next year.

“As a nation we used to fly over or via Asia, on our way to Europe,” said Joyce.

“Now we fly to Asia, both for business and relaxation. And as Asian economies grow, the future will be about travel to and within Asia.”

However, the plans were lashed by the Australian and International Pilots Association, which warned of strike action.

“(This) is exactly what Qantas pilots have been warning of for months: a shift of Australian Qantas operations into Asia to start employing people working to Asian conditions and standards,” said AIPA president Barry Jackson.

The airline’s share prices hiked almost five per cent when the airline news hit the market before retreating to close marginally lower at Aus$1.52.

Qantas has been grappling with disasters and surging fuel costs that have hit its bottom line, with a string of natural disasters this year costing it US$21 million.

Industry observers, however, backed the move.

“They had to do something and the changes are a step in the right direction,” Centre for Asia-Pacific Aviation executive chairman Peter Harbison told AFP.

“It’s the growth market,” he said of Asia.

“The domestic market is mature with increasing competition, so this is pretty much a no-brainer.”