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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.”
Peter Sutton
says:It is very sad to read about so many QANTAS staff being currently stood down or let go but under the current situation this move had to be expected and Alan Joyce has made the best decision possible…Peter Sutton Retired QANTAS Family member
John Phillips
says:Feel sorry for the staff being dismissed or stood down, but not much else QF could do, to position themselves for the future.
We don’t need another failed airline in Australia.
Peter
says:This announcement could be the nail in the coffin for a new Virgin Australia owner.
Rod Pickin
says:This is not a decision that QF would either like or desire, not forgetting the staff involved of course, but I just wonder if AJ had a call from a high up in CBR looking for a lever to get the domestic border controls reviewed. I believe it is covered under “facilitation”
Mark
says:Think only a matter of time till the A380s follow the 747s into the desert.
hsfgh
says:Yes, I expect at least some of their A380s will go there without ever entering service again and plenty of A380s from other carriers will go too.
Air France is retiring all of theirs and Lufthansa is retiring at least some of theirs.
In reality, it’s not from covid-19. I don’t think a single airline is happy with the A380 and a few had already been scrapped before covid.
Charles
says:Feel sad for all staff, especially those with multi-decades’ of service.
China must pay in some huge way for unleashing this pandemic.
Kim
says:Alan’s reduced pay runs out shortly – will he continue at the lower rate?
Edward
says:Maybe current space availability is full.
The owner is upgrading area to house total 100 various aircraft types.
As QF needed to get their now fully retired 744’s stored immediately, an overseas facility had to be used.
Sad the ‘Queen of the Skies’ has had such an ignominious ending!
I now that wasn’t QF’s choice, as they were to form various areas’ of celebration for this, QF’s Centenary year.
Grumpyoldfart
says:Why are the aircraft being parked in California?
Is there any reason for not using Alice Springs?
Darren
says:As AJ said 2/3rds of Qantas revenue is from domestic travel. These job cuts lie squarely on the heads of the state governments that closed the state borders where health experts said it wasn’t required.
MERVYN CROWE
says:Hello ”Grumpyoldfart” the reason the 747s have gone to the Californian storage airfields like Victorville, Mojave and San Bernadino, is that those airfields also do scrapping, which unfortunately, will most likely happen to the five that have gone over the past few months. and the last one, VH-OEJ on 30th June. ASP is for storage only, do not offer scrapping, and currently pretty packed with SQ A380 and 777 aircraft along with Silkair and some Alliance. F70/F100 aircraft.
There was talk before COVID arrived, that the last 6 QF 747-438ERs VH-OEE-OEJ, could be converted to freighters.
If that became the case, freight conversion can be had at those airfields. Time will tell.
Red Cee
says:Disagree Darren. It was on medical advice the state borders WERE closed. The medical advice was from very qualified medical professionals in the states concerned.
Barry
says:Headline latest: ‘Unions’ vowing to fight for their jobs’….
Really?
Just how are they going to do that? Dip into funds from their members’? Or better still, their own pockets, as they get paid no matter what happens.
Or do they wish to ‘slowly bake QANTAS’, as they wanted to do between August & October 2011?
QANTAS CEO, Alan Joyce, & its’ Board sure outsmarted them on that occasion.
Each day, unions’ are becoming more, & more irrelevant.
Let’s see how many airline workers’ stay members’ post-pandemic. I’d predict very few, & without their fees’ rolling in, how can the unions’ support their favoured political party?
Interesting times ahead.
Perry
says:After the ‘uncontained engine failure’ on QF32 a few years’ ago, it confirmed my total dislike of Airbus planes.
It landed, thanks to the Captains’ in the cockpit, backed by their vast experience, & good training.
There’ll be many more airlines’ worldwide storing them, & some scrapping them, literally.
tk
says:The A380 is a dud but it’s nothing to do with it having one uncontained engine failure with the Rolls Royce made engine. The design is significantly overweight and the use of space and cargo carrying ability is poor.
The rest of the Airbus range is great (except perhaps the A340-500/600 which is also an overweight design but its long out of production now).
Perry
says:But Airbus CHOSE the RR Trent engine, which failed.
I also didn’t like its’ design.
TK
says:Again, the choice of engine is not the problem with the A380
Michael Andrew
says:Its sad to see this icon of Australia (Qantas) with 100 years of faithful service to us all wriggling on that same hook Ansett was subject to, hopefully the outcome will be far different. Mr Joyce and the current board of management are radical in the way airline business is conducted, this to their credit. Thank Christ, Jeff Dixon is not at the controls otherwise everything would now be in the desert, not just the aircraft!