Qantas will increase capacity on its domestic network but will defer delivery of two A380 superjumbo jets as part of $400 million in capital expenditure cuts to its struggling international business, the airline announced today.
The cuts come on top of a $500 million capex reduction announced in February and will see the two A380s scheduled to arrive next year pushed back to 2016-17. Qantas is slated to receive another six A380s from 2018-19.
The airline said it would save between $280 and $365 million over the next two years through a range of “transformation initiatives,” including withdrawing from money-losing routes and modernising operational practices. The cuts will see the Qantas Group’s capital expenditures drop from a planned $2.3 billion to $1.9 billion in 2012-13.
“Our priorities remain to build on our strong domestic business, enhance Qantas Frequent Flyer, turn around Qantas International and grow Jetstar in Asia,” Qantas CEO Alan Joyce said.
Joyce said Qantas had completed its review of plans to consolidate its heavy maintenance operations in Australia and would announce those plans by mid-month. Media reports have indicated that the airline will shed about 400 jobs at its Tullamarine maintenance facility with another 600-plus jobs at its Avalon facility likely to go within two years. Qantas announced 500 job cuts as part of the previous round of cuts in February.
Qantas also today announced a range of plans to increase domestic capacity in what the airline described as an effort to maintain its profit-maximising 65 per cent share of the domestic market.
Those plans include increased peak hour services on core business routes between Sydney, Melbourne and Brisbane, the reintroduction of Boeing 747 services between Sydney-Perth and increased Airbus A330 services between Melbourne-Perth. Qantas said Jetstar will increase its capacity in key leisure markets while QantasLink will introduce Fokker 100 services between Brisbane and Emerald (operated on its behalf by Alliance Airlines).
Those changes are due to take effect in the next financial year beginning in July.