The Qantas Group has announced it will cut 6,000 jobs altogether, or nearly 20 per cent of its workforce, and continue stand-downs for a further 15,000 employees.
In a statement released on Thursday morning to announce its post-pandemic strategy, the business also said it would ground 100 aircraft for up to 12 months, including most of its international fleet.
Chief executive Alan Joyce said, “Adapting to this new reality means some very painful decisions. The job losses we’re announcing today are confronting. So is the fact thousands more of our people on stand-down will face a long interruption to their airline careers until this work returns.”
As part of a raft of proposals, Qantas also said:
- A total of 6,000 of 29,000 staff would be made redundant;
- Alan Joyce will continue in his role until at least the end of FY23
- The Group’s six remaining 747s will be retired immediately, six months ahead of schedule;
- It would defer deliveries of A321neo and 787-9;
- It planned to generate up to $1.9 billion from equity raising;
- Of those job losses, 1,450 will be non-operational and mainly corporate; 1,500 from ground operations; 1,050 in cabin crew (with a further 6,900 on stand down); 630 in engineering; 220 from pilots;
- There is “significant uncertainty” as to when flying levels will support the return of the A380.
Of the wider Qantas Group’s 29,000 staff, around 8,000 are expected to return by the end of July this year, increasing to 15,000 by the end of 2020.
The business then hopes to return staffing levels to 21,000 active people by June 2022, though much of that will depend on international border restrictions easing.
In total, around 100 aircraft will be grounded, including most of Qantas’ international fleet. The “majority” are expected to eventually return to the air, but some leased aircraft may be returned. A321neo and 787-9 fleet deliveries, meanwhile, have been deferred to meet the Group’s requirements.
The statement added that there is “significant uncertainty” as to when flying levels will support the return of its 12 A380s, which will remain idle.
“As a result, the carrying value of the A380 fleet, spare engines and spare parts will be written down to their fair value,” Qantas said.
To help recover, the business will raise equity of up to $1.9 billion, something it had previously appeared to rule out. Overall, it predicts savings of $15 billion, as a result of cutting staff, reduced fuel consumption and “productivity improvements”.
Surprisingly, Qantas said it still expects to breakeven or even post a small underlying profit for the current financial year, as a result of a strong first-half performance combined with “swift action” to reduce its cash burn.
Joyce said he regretted the staff losses but the “crisis has left us no choice” and that he’s committed to providing those affected with as much support as he can.
“That includes preserving as many jobs as possible through stand-downs, offering voluntary rather than compulsory redundancies where possible, and providing large severance payouts for long-serving employees in particular,” he said.
“As we’ve done throughout this crisis, our decisions are based on the facts we have now and the road we see in front of us. Our plan gives us flexibility under a range of scenarios, including a faster rebound or a slower recovery.
“Despite the hard choices we’re making today, we’re fundamentally optimistic about the future. Almost two-thirds of our pre-crisis earnings came from the domestic market, which is likely to recover fastest – particularly as state borders prepare to open.
“We have the leading full service and low fares airlines in Australia, where distance makes air travel essential, and diversified earnings through Qantas Loyalty.
“We still have big ambitions for long haul international flights, which will have even more potential on the other side of this.
“As a business, recapitalising means we can get ready sooner for new opportunities, returning to profit and building long term shareholder value. As the national carrier, we remain committed to supporting tourism, connecting regional communities and safely flying millions of people every year.”