An expected financial loss of $250-300 million for the first half of the current financial year is seeing Qantas slash “at least” 1,000 jobs among a range of other measures as it struggles to further cut costs in a deteriorating airline travel market.
“We will do whatever we need to do to secure the Qantas Group’s future,” Qantas Group CEO Alan Joyce said in a statement announcing the expected loses.
“The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia.”
To meet those challenges, Qantas says it aims to accelerate existing cost saving measures to achieve savings of $2 billion over three years. In addition to the job cuts – the details for which remain unspecified – the CEO and board will take pay cuts, senior execs will have their pay frozen and bonuses suspended, spending with the airline’s top 100 suppliers will be “reviewed” and unspecified “network optimisation and improved fleet utilisation” is planned.
The review of capital expenditure will be needed to ensure the business generates “positive net free cash flow from FY15”.
Said the statement: “The Group will also launch an immediate review to identify structural changes that could potentially unlock sources of capital and value for shareholders. No options will be excluded from the review.”
Joyce said action was needed regardless of any financial support form the federal government, for which it has been lobbying for over the past 10 days.
“None of the measures being discussed with the government would alleviate the need for us to take the comprehensive actions we have announced today. Government action will, however, be key in enabling us to keep competing effectively on a level playing field,” he said.
“Since early 2012, there has also been an unprecedented distortion of the Australian domestic market, with Virgin Australia’s strategy to seek majority ownership and massive financial backing from foreign government-owned airlines,” Joyce asserted.
“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 $300 million-plus injection from its foreign owners.”