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Joyce outlines Qantas job cuts and fleet plans

written by australianaviation.com.au | May 8, 2014
BOEING 747 400 QANTAS BNE SEP12 RF IMG_7208
Qantas is retiring five 747-400s. (Rob Finlayson)

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three 737-400s have been retired, with two 767 retirements due by the end of June and that a further six 767s will be withdrawn from the fleet by the end of 2014, with the last six to retire between January and March 2015.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.

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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.

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The A330-200. (Rob Finlayson)
The A330-200 will soon be one of just two types in the Qantas domestic fleet. (Rob Finlayson)

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18 Comments

  • Glen

    says:

    if Joyce had of not cancelled the 787 and ordered another new aircraft long ago then QANTAS wouldn’t be in the trouble its in now. The best way to cut costs to use less fuel and of raise revenue by using newer aircraft with WIFI but no Joyce just has to use the big axe. Of course this make a lot of staff unhappy and they will leave too so customer service will suffer in the end.

  • Raymond

    says:

    Glen, don’t think any staff will need to leave of their own volition… they’ll be going anyway, with 5,000 full-time jobs gone by 2017!

  • Chensy

    says:

    The fuel price is too unpredictable. When they did the fleet planning back then, nobody predict the surge in fuel price. So probably they decided to control investment on more fuel-effecient aircrafts. The problem of high labour cost seems to be a taboo issue in Australia. It is inevitable that this problem has to be solved, but I am not sure cutting 5000 jobs is the real solution. I am not sure EK is the right Ally(partner) for QF. Its potential is too huge for QF. It is a classic example of a Chinese proverb- The guest is too strong for the host(客强主弱). I hope QF International’s plan is not to go virtual and hand over all the international routes to EK in the future.

  • Brett

    says:

    Won’t Qantas’ domestic fleet will be changed to just the A330-200 not the 300?

    • australianaviation.com.au

      says:

      @Brett – you’re right, that was a typo, now corrected.

  • marc

    says:

    Wouldn’t it make more sense for Qantas to go all Boeing, say 737/787/777 and JS A320/330? Seems illogical the 787s are going to JS and they’re repainting the 330s.

  • Mac Carter

    says:

    Job cuts and new aircraft are not the be all and end all for the dilemma Qantas finds itself in.
    More satisfied customers are the answer.
    To have more satisfied customers, you need contented staff who feel proud of their Airline and secure in their long term employment.

  • Peter

    says:

    The issue is not alone bad management decisions impacting on the lives of staff and the poor morale that flows through to the customers , but also the age we live in where there is a demand for cheaper and cheaper products.
    This eventualy flows onto the quality of the product , if it be permeants being added to milk or lower quality maintenance of aircraft..
    The next time your at 35,000 feet in a aircraft consider you get what you pay for , cheap airfares are they worth the risk.
    As for poor management at the head of any company, it always flows down hill through the whole organisation .

  • GlenCBR

    says:

    I was under the impression that Qantas had ‘deferred’ the acquisition of new aircraft – I’m not sure how long they delay the remaining (8?) A380s but if they phfaff about too long they will lose them and see a long queue of buyers from the wrong end. (Or are they hanging out for the A390?).
    I believe they have deferred (there must be a more appropriate word for “been unable to make a timely and appropriate business decision”) the delivery of three of the 787-8s for Jetstar.
    I think business reality will force their hand to commit to the 789s for Qantas but if they don’t say “I DO” to them by November 2014 then they are pretty much looking to repo John Travolta’s 707.
    Please Mr Joyce, give us some good (reassuring) news about Qantas growth in the near term (the very near term) Or, um, does anyone know a cleaner at Air New Zealand who might know a bit about airline strategies? (What happened to Peter Greig?)
    Good luck Qantas fly for another 100 years, bigger, better and unencumbered by bewildered, inexperienced bunch of myopic bean counters

  • Toby

    says:

    Soon enough I’ll have finished my pilot training. Should I be worried about looking for a job or is it just qantas who’s up [the] creek?

  • IAN

    says:

    the wages at QF are insanely high. No wonder all trans-Tasman flights of QF, VA & JQ are operated by NZL crews.

    The question is when will Tiger start flying the Tasman with low cost NZL crews ? (or are Thai crews cheaper ? Definitely if they didn’t need to provide accom for them as well) That will really shake up JQ.

  • Patrick Kilby

    says:

    I suspect the 789 ‘s will start appearing in 2016 and 2017 (5-10); 1-2 A380s in 2018 so all the 747s can go (at last), then more 789s, as required and as the A333s retire.

  • John

    says:

    Why did QF pull out of SYD/(Mt Hotham)MHU ?

    Surely it would have been a reasonable yield.

    Now with Brindabella gone, you can no longer fly to Cooma(OOM) either.

    No one from SYD is going to fly SYD/CBR to get to NSW ski resorts.

    Australian ski resorts will suffer, while at same time, flights to ZQN in New Zealand seem to be booming.

  • Dave

    says:

    …. I sat in a Qantas “business forum” for employees in Syd back in the early 2000’s and heard the prophetic statement of doom in response to the question….”will Qantas be ordering the new 777?” the emphatic response (even blunt) from the platform was….. “no we don’t see it as a viable alternative for our long haul operation” now hasn’t that gem of management know how come back to bight.

  • Bert Foster

    says:

    Ian, the wages for a lot of staff are not “insanely high” except for some of the executives who rake in more than many airline CEOs in the world and in some cases more than the totals of some of the Asian counterparts combined. Pilots and engineers are on a par with those of SQ, CX, EK and MH.

    The money has gone in ‘get rich quick schemes’ in failed attempts like Red Roo, Jetstar Asia/Japan and now Jetstar HK which can’t even get approval to operate but have aircraft and crews being paid for and just sitting there. Mainline Qantas Domestic and International is paying for this.

    Everything is for short term gain and there is no long term planning, the fleet and the decisions about the fleet being made are a classic example.

    What was once an airline that lead world trends now has to play catch up but they are still living in the dream that they know best. ‘Worlds Best Practice????’

  • Pete

    says:

    Someone should have bought 777s way back when…

  • David

    says:

    Alan Joyce please go!!!! Go now!!!!!! Cancelling the787-8, 787-9 was a mistake, not replacing the 747 series with the 777′s series(QANTAS was involed in the development and getting the 747ER ( not one else did). Joyce, Dixon and Strong could’nt organise a chook raffle!! Now the QANTAS staff wear the pain. The only pain for Joyce is no performace bonus- poor him-not! CEO wages not inline with best practice!! Boo Hoo!!!

    Fleet picks- A330′s-failed
    – 747 400 ER failed
    – 777′s not picked- failed
    Jetstar HK-failed
    Jetstar Japan- failed
    Red Roo-failed

    After watching Accident Investigation about QF32 and the one concerning the 737-800 that nearly went down like the Turkish Airlines did. QANTAS fares are woth every cent!!!!!

  • Reverend

    says:

    I’d like to see Qantas get rid of the old Dash 8s, buy more Q400s, buy more boeing 787-9 and get the rest of their A380

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