Qantas to slash jobs, cut costs

Embattled carrier Qantas said Thursday it will slash at least 500 jobs, cut costs and close two international routes after posting an 83 percent slump in first-half net profits. The Australian airline's result in the six months to December came in at Aus$42 million ($44.8 million), compared to Aus$241 million in the previous corresponding period, due to high fuel costs and a fleet grounding in October. Chief executive Alan Joyce pulled all Qantas planes out of the skies for 48 hours as part of a row with staff over plans to shift the focus of its ailing international arm to Asia. It cost the carrier dearly, but Joyce said it was the only option. "The damaging industrial action we faced last year is over, and industrial action on that scale is unlikely for the foreseeable future," he said. The dispute was ultimately terminated by an order of the country's industrial relations umpire but it cost Qantas Aus$194 million. Jet fuel costs in the first half were also up by Aus$444 million. In a bid to recoup the losses, Joyce said the airline's projected capital expenditure for full-year 2012 would be cut by Aus$200 million to Aus$2.3 billion and by a further Aus$500 million in 2012-2013. The market responded favourably, with the company's shares closing 6.09 percent stronger at Aus$1.66. Savings will come from the deferral of new Boeing 787-800s due to manufacturer delays and a reduction in planned domestic growth. This will see jobs cut, with Qantas also looking to consolidate its engineering and catering services. "We anticipate there will be 500 positions affected by the immediate changes that we have announced today," Joyce said, but made clear no jobs would be going offshore, a key gripe of unions. However, he foreshadowed further job losses following the catering and heavy maintenance reviews. "We can't at this stage pre-empt the reviews that are going to take place but, as I said... we expect there to be further jobs affected," said Joyce. "It would be premature for me to actually say what we believe the total number will be." The Australian Services Union said the cuts were "sacrificing livelihoods and the long-term efficiency of the airline for short-term cost cutting" while the Australian Manufacturing Workers Union called them a "real blow". But Australia's peak tourism body urged Qantas to get on with its reforms to ensure it remains a viable national airline, saying the country did not want it go the way of the now-defunct US carriers TWA and Pan Am. "What we need in Australia, for Australian tourism, is a very strong national carrier," said Tourism and Transport Forum chief executive officer John Lee. "We need Qantas to be successful, we need Qantas to be flexible and commercially viable." Canberra acknowledged Qantas faced challenges competing with airlines overseas that have a lower cost base and, in some cases, government funding, but cautioned that vital skills could be lost forever if maintenance jobs went. "We are keen to see skilled jobs kept in Australia and kept in the maintenance facilities, so we will work with them to see what can be done," Employment Minister Bill Shorten said. The airline will also axe unprofitable Singapore-Mumbai and Auckland-Los Angeles services in May with Joyce saying the airline must "confront the new global realities" and adapt. "Overall our business is strong, we are exerting financial discipline, and we are well placed to handle this complex economic and competitive environment," he said.