Qantas CEO Alan Joyce has told the Macquarie Australia Conference in Sydney that the airline is on track to achieve $800 million in savings by June 2015, and the planned $2 billion in savings by early 2017.
The airline will have reduced its full-time employee numbers by 2,200 by the end of June this year, Joyce said, with a further 1,800 jobs to follow by June 2015 and another 1,000 by 2017. The Qantas boss also said the airline was looking to reduce its costs by 10 per cent excluding fuel, and that its goal was to reduce the cost gap to Virgin Australia in order to make it more competitive.
Part of those cost reductions will come from fleet rationalisation, with Joyce’s presentation to the conference providing new information on Qantas’s fleet plans, including aircraft type retirements and aircraft utilisation plans. As already announced the Qantas mainline domestic fleet will operate just two types (the A330-200 and 737-800) by the end of March 2015, but his presentation explains that since the end of 2013 the last three 737-400s have been retired, with two 767 retirements due by the end of June and that a further six 767s will be withdrawn from the fleet by the end of 2014, with the last six to retire between January and March 2015. The 767s are able to be retired as Jetstar continues to take delivery of 787-8s, which in turn allows Jetstar to roll over its A330-200s to Qantas.
Joyce’s presentation says the domestic fleet rationalisation will save Qantas over $55 million a year, including fuel efficiency savings. Further savings will come from better aircraft utilisation.
On the international side the presentation explains how network changes will enable the retirement of three 747-400s by the end of 2014. Those changes are: exiting Perth-Singapore (operated by an A330-300) and in turn down-guaging Brisbane-Singapore from the 747 to the A330-330; increased domestic utilisation allowing an A330 to be freed up to replace a 747-400 on Sydney-Singapore; and retiming Melbourne-Dubai-London flights freeing up A380 capacity which will be redeployed on Sydney-DFW flights. In addition, a further two 747-400s are due to be retired by mid 2016, without explaining what other network/route changes would be necessary to facilitate that.
The five 747-400 retirements in total should save great than $100 million a year.
Joyce said challenges remained in the highly competitive nature of all its markets, and in the high Australian dollar fuel price.