New planes, job losses in major Qantas restructure
Australian carrier Qantas announced a major restructuring that could see it buy 110 new planes, cut up to 1,000 jobs and launch two Asia-focussed airlines as it bids to stem financial losses.
The bold new strategy for its international operations will include the airline slashing positions while deferring delivery of six Airbus A380 super-jumbo jets for up to six years to keep costs down.
Part of the business plan will also see Qantas, Japan Airlines and Mitsubishi Corp. launch a new low-cost domestic airline, Jetstar Japan, by the end of next year.
The carrier plans also to set-up a new joint-venture premium airline based in Asia, with the location yet to be finalised as it sets its sights firmly on the growth region.
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 Aus$206 (US$218) million. It announces its year to June 30 results next week.
Chief executive Alan Joyce has previously said he expects the company’s international operations to record a loss of $Aus200 million before tax, and said change had to happen.
“Qantas International is a great airline with a proud history,” he said on Tuesday.
“But it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change.
“To do nothing, or tinker around the edges, is not an option.”
The key objective of the new five-year plan was to return the airline’s international operations to profitability, with a new focus on Asia.
“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.”
But 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.
“Until we get an assurance from Alan Joyce that future Qantas flights will be operated by Qantas pilots we will be doing everything we can to stop this destructive strategy for Qantas’s future.”
As part of the focus on Asia, Qantas will strengthen its relationship with British Airways, which will carry more passengers between Qantas’ Asian destinations and Europe.
From early 2012, the Australian airline will still fly from Australia to Bangkok and Hong Kong, but British Airways will operate the Bangkok-London and Hong Kong-London sectors.
Qantas also announced its new gateway to South America would be the Chilean capital, Santiago, replacing its Sydney-Buenos Aires route.
To meet its objectives, Qantas will buy up to 110 Airbus A320 aircraft to support fleet renewal and growth over the next 10 to 15 years, with 194 rights and options on further purchases.
Joyce said the purchases would position Qantas “very strongly in the competitive Asia-Pacific aviation market, while containing costs”.
“The first of the A320s will be allocated to the new Jetstar Japan venture between the Qantas Group, Japan Airlines and Mitsubishi,” he said.
The venture will be one-third controlled by each company and commence by the end of 2012 with three new A320s, growing to 24 aircraft.
It will initially fly domestically from Tokyo’s Narita airport and Osaka, with plans to offer short-haul international services to key Asian cities.
A new premium joint-venture airline based in Asia is also core to Qantas’ revised strategy. It will not be branded under the Qantas name but will use the airline’s know-how. Eleven A320 aircraft will initially be used, Joyce said.