Qantas restructuring to include route and job cuts

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Published: August 17, 2011

Qantas A380. Photo: Courtesy, Qantas

The Qantas Group announced the largest restructuring in its history Tuesday with the aim of returning its international division to profitability. The program includes cutting routes, laying off staff, retiring aircraft and deferring deliveries (ATW Daily News, July 14).

Also, to tap the huge growth within Asia, the group announced it will form a new low-cost airline in Japan and a new premium airline to be based in Singapore or Kuala Lumpur.

Computer-generated drawing of A320neo in Jetstar livery. Photo: Courtesy, Airbus

QF also ordered 110, 180-seat Airbus A320s, including 78 A320neos, to grow subsidiary Jetstar’s operations and meet the demands of the two new airlines. The order is valued at A$ 4 billion ($ 4.2 billion).

QF CEO Alan Joyce warned that Qantas International faced oblivion if it wasn’t restructured, as only “18 out of every 100 passengers leaving Australia flew on Qantas.” And in a move that is sure to anger unions, the airline will lay off 1,000 of its 35,000 staff from the engineer, pilot and flight attendant ranks. However, Joyce said that most of the job losses will be covered by voluntary redundancies.

He noted that the changes were just the first phase of a “new strategy to build a truly modern, customer-focused and competitive global aviation business. Qantas International is a great airline with a proud history, but it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change. Qantas International takes up enormous amounts of capital, and our cost base is around 20% higher than that of our key competitors. To do nothing, or tinker around the edges, is not an option.”

To reposition the international airline, QF is dropping a number of services and relying more on partners such as British Airways and American Airlines. QF will defer its last six A380 deliveries for five years and will retire all but nine of its Boeing 747s, with the first four going this year. The remaining nine 747s will receive an A$ 400 million cabin upgrade; the first reconfigured 747 will rejoin the fleet next month.

Joyce said it is essential that QF access what he termed “the world’s fastest growing region for air travel” with new airline investments. The premium airline will initially have 11 aircraft but will not be called Qantas or Jetstar, said Joyce, who noted it will target the growing number of middle-class Asian travelers and will employ local staff.

QF announced Tuesday it will enter into a joint venture with Japan Airlines and Mitsubishi Corp. to launch an LCC based on Jetstar (ATW Daily News, Aug. 16). The yet-to-be-named airline, which has been dubbed “JJ” for Jetstar Japan, will have 24 aircraft and will launch late next year.

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