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Joyce confirms Qantas loss, says job cuts will save $300m

written by australianaviation.com.au | August 9, 2012
Qantas remains on track to return its money-losing international operations to the black within three years, CEO Alan Joyce says. (Rob Finlayson)

Qantas expects to save $300 million a year through 2,800 previously announced job cuts under its five year transformation plan, CEO Alan Joyce told a US business forum yesterday in Sydney on Wednesday.

Joyce also revealed that the airline will report an underlying profit but a statutory loss when it releases its annual financial results on August 23, confirming widely held speculation that the airline lost money last year. Joyce blamed the loss on the cost of last year’s labour dispute, the high price of fuel and the short-term effects of the airline’s transformation.

“It is the price we pay for a rapid and massive transition in our business – in making it stronger and better,” he said.

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Though the 2,800 job losses do not include any new cuts, it is the first time Qantas has placed a number on the total number of jobs to be lost through its transformation plan. The job cuts have been announced in chunks over the past year.

Most of the cuts have come from maintenance, engineering and catering, with Qantas having announced the closure of one of its three Australian maintenance bases and the sale of two of its seven catering centres. Most recently, Qantas and Lufthansa announced the closure of a joint jet engine workshop in Melbourne at the cost of 164 jobs.

The 2,800 cuts represent about 10 per cent of Qantas 26,000 employees.

Joyce said Qantas was on track to return its struggling international business to profitability within three years. Qantas International is believed to have lost roughly $450 million last year as its share of the market continued to slip.

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Meanwhile, Qantas is claiming victory after Fair Work Australia yesterday backed the airline in its dispute with its baggage handlers union, which had argued for a limit on the use of outsourced labour.

In a statement, Qantas said the decision left it “free to run our business as we see fit and not be dictated to by union officials who do not have the airline’s best interests at heart.”

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4 Comments

  • Dane

    says:

    Qantas need to look at how they do business. Would it not be cheaper to run smaller capacity aircraft at a higher frequency on international routes?

  • Cal

    says:

    @Dane, no, not all the time, you can’t run smaller capacity aircraft at a higher frequency because you lose high yeilding premium traffic

  • NJP

    says:

    The problem for QF international is they are the top of the pay scales & overheads compared to their competition and they are at the ‘end of the line’ rather than being the middle of the hub. SQ, EK & CX etc have good thru-traffic volumes from their bases but QF only have NZ or it’s domestic traffic.

  • Ty

    says:

    5 years ago Qantas was in ‘the sweetest spot’ according to then CEO Geoff Dixon

    Im sick of listening to people blaming the airlines woes on the competition for being more efficient, or for offering a better product. The Arrogance of this management team has lead to a failure of investment in quality service and an obsession with cost cutting. They are good at one thing, making money… but their golden run has come to an abrupt halt. Management including the QF board have taken the blood and lifeline (its customers and its front line staff) of the airline for granted for too long. This is an airline with very little imagination which has meant that it is constantly playing catch up and will cut off its face despite its nose. The real spirit of Australia? A bloated corporate pig, dull and deranged … these cuts will have flow on effects that are yet to be seen …

    You reap what you sow AJ

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