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Qantas will outsource 2,000 jobs after rejecting TWU bid

written by Adam Thorn | November 30, 2020
QF9 VH-ZND ‘Yam Dreaming' Perth - London Heathrow repatriation
19/10 QF9 VH-ZND ‘Yam Dreaming’ by Emily Kame Kngwarreye – started the long hop from Sydney instead of Melbourne because this is the first of reportedly three government planned repatriation services to London. They will be heading to the Darwin RAAF base on their return, for quarantine isolation purposes. QF9 lifted away from Perth at 18:35, four minutes after sunset. (Richard Kreider)

Qantas has rejected a proposal from the TWU to retain 2,000 ground-handling jobs and confirmed the roles will be outsourced.

The airline said the bid from the union on behalf of employees didn’t save enough money compared with rival offers from third-party providers and was too “theoretical”.

In August, Qantas first announced the business was considering axing its remaining ground-handling operations, subject to hearing bids from both private contractors as well as existing staff.

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Qantas’ plans will see the airline brand remove operations at the 10 Australian airports where the work is done in-house, which includes Adelaide, Alice Springs, Brisbane, Cairns, Canberra, Darwin, Melbourne, Perth, Sydney and Townsville.

Last week, TWU national secretary Michael Kaine said its bid, compiled with consulting firm EY, was “competitive” and has identified “numerous efficiencies and savings”.

Qantas, however, said the proposal didn’t meet its objective, which it cited as reducing the cost of ground handling operations by $100 million and avoiding large spending on equipment such as aircraft tugs and baggage loaders.

“Qantas granted three separate extensions to the original deadline for the bid following requests by the TWU, doubling the total period to 12 weeks,” the business said in a statement.

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“Their resulting national bid was, by their own admission, ‘theoretical’ with no roadmap of how projected cost savings would be achieved. For instance, the proposal resulted in 1 million surplus labour hours – or around 900 roles – but no details on how to deal with that surplus.  It also did not meet the objectives relating to capital expenditure on ground services equipment nor matching the ground handling services (and their cost) to fluctuating levels of demand.

“While proposals from employees at various ports did include detailed plans that would save around $18 million, there remained a significant gap compared to what was offered by third party providers.

“A number of external bidders, some of whom already provide these services at 55 airports across Australia, were able to meet all of the objectives, including reducing annual costs by approximately $103 million.

“The preferred bidders are being notified today and, subject to consultation and finalising contract terms, transition is intended to occur in the first quarter of 2021.”

The TWU’s Kaine said Monday was a “dark day” and called the decision “spiteful”.

Qantas said it will now consult with employees, with those losing their jobs being entitled to a redundancy package and given support to transition to new jobs.

Jetstar, meanwhile, has already decided to outsource ground handling at the six remaining Australian airports – Adelaide, Avalon, Brisbane, Cairns, Melbourne and Sydney Domestic – leading to 370 job losses.

The business also said the review process on a similar decision to outsource crew bus services in-and-around Sydney Airport, potentially affecting around 50 employees, will come before the end of the year.

Qantas Domestic and International chief executive Andrew David said, “This is another tough day for Qantas, particularly for our ground handling teams and their families. We thank every one of them for their professionalism and contribution over the years supporting our customers and operations.

“The TWU’s in-house bid claimed that significant savings could be made but it failed to outline sufficient practical detail on how this might be achieved, despite us requesting this information multiple times throughout the process. Even with the involvement of a large accounting firm, the bid falls well short of what the specialist external providers were able to come up with.

“We have used these specialist ground handlers at many Australian airports for decades and they’ve proven they can deliver a safe and reliable service more efficiently than it’s currently done in-house. This isn’t a reflection on our people but it is a reflection of economies of scale and the urgent need we have because of COVID to unlock these efficiencies.”

In June, the wider Qantas group said it would cut 6,000 jobs altogether, or nearly 20 per cent of its workforce, before it later revealed the news around ground handling jobs.

The drastic cuts followed the business’ full-year financial results showing a loss before tax of $2.7 billion and an underlying profit before tax of just $124 million.

Virgin, meanwhile, went into administration before cutting 3,000 jobs and axing the Tigerair brand.

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22 Comments

  • John Phillips

    says:

    Pay back time for the TWU, after they caused Joyce to ground QF due to their wildcat strikes. Their bid was never going to succeed; the TWU can’t run a union, let alone a business, efficiently.

    And presumably the new ground handling company employs TWU members, or are they non unionised?

  • Mark Dale

    says:

    Another nail in the QANTAS coffin. Their Service has gone down rapidly over the past years and now they have definitely become a BUDGET AIRLINE. Glad i am not a Shareholder !!!

  • Graham Haxell

    says:

    So much for loyalty! Thrown on the scrap heap just prior to Christmas! I suspect that the successful service provider will institute a cut price and cut rate service – corners will be cut and service almost non-existent.

  • Craigy

    says:

    No surprise in this announcement. The TWU was never going to be able to match DNATA etcetera.

  • Bill O'Really

    says:

    Alan, the 24 Million Dollar man. What a guy. Hypocrisy, why, not at all. Just Alan’s usual caring attitude to people and their worth to him.

  • Steve A

    says:

    Yes, 2,500 valuable Qantas staff axed to save $100 million over 5 years.
    So, what is $100 million in Qantas terms, as a comparison?
    Well, it’s equivalent to Alan Joyce’s salary and bonuses since he became CEO of Qantas.
    Alan Joyce’s job versus 2,500 valuable Qantas staff jobs? Sounds right doesn’t it.
    Or, to compare it to another measure, it is equivalent to just 3% of the $3 billion plus that Qantas management spent on share buy backs over recent years. 2,500 valuable Qantas staff members versus just 3% of the money squandered on share buy backs? Sounds right doesn’t it?
    Sounds suspiciously like the wrong people at Qantas are getting the boot, doesn’t it?

  • Trevor

    says:

    Just yet another example of TWU not knowing what they’re doing.
    They’ve no ‘expertise’ in this area.
    Failing to meet a basic costing model, & how this would be achieved, is laughable.
    Unions’ these days are a such a joke, no wonder working folk have deserted them in droves’.

  • Alan Joyce destroying Qantas and it reputation of being Australian minded.
    Taking money indirectly from taxpayers, displacing loyal employees and playing States and Federal Govt against one another by wanting concessions. Witch again is at the expense of employees and taxpayers.
    Should be dismissed without glory .reeards and sent paching back to where he came from.
    I have not used neither Qantas or Jetstar soon after he took control and showed his true colors.

  • DARREL DELEEUW

    says:

    The TWU is a high cost low service bunch of lazy thugs. I have witnessed their ‘services’ during my time in the airline industry. If they got paid for the WORK THEY ACTUALLY DID OVER A SHIFT, their pay should be 75% LESS..They continue to hold on to the ‘job for life’ at any cost crap… which is completely unsustainable for a business

  • Jason

    says:

    Sensible move considering the circumstances. Comments above from both sides are ill conceived and largely inaccurate. TWU has a place in ensuring workers rights are maintained and safety is achieved, but the manner in which they have performed over the years had in many cases been unhelpful and counterintuitive to their cause. Likewise, suggestingQANTAS service is going down the tube with contractors providing an inferior service is also out of line, especially considering the majority of contracted staff will be sourced from the very QANTAD staff been made redundant. I agree the casualisation of the Australian workforce reduces certainty and a potential reduction in pay and conditions. Maybe the TEU can be a little more constructive and work with government and companies to achieve as best an outcome for workers as possible during this massive economic reset. Deal with this in a collegiate fashion before the unions suffer a further fall into insignificance.

  • Marum

    says:

    Ah Well!! I can always take my own munchies and coffee. Will they allow you to use the microwave in the galley?

    Tuna sangers….Marum Katze.

  • AgentGerko

    says:

    Surely the new supplier is going to require trained staff to fill the outsourced jobs, so won’t it just be a case of the TWU people leaving QF and getting employed by the new supplier? Its not being sent overseas.

  • Peter

    says:

    Shame on you Mr Joyce. Ate you cutting your income to help?

  • Jack

    says:

    Sad that Qantas thinks it is the “spirt of Australia” and then pushes ahead with cutting jobs. I agree with the above comments that this was always going to happen. Smart move by Joyce though by allowing the TWU to put forward its own bid, discredit the bid/pick holes in it and then QF are free to cut the jobs and use external service providers.

  • Paul Robson

    says:

    No fan of the TWU, but unfortunate for the workers.
    With understaffed contractors, enjoy the wait for your bags.
    Also interesting unlike some smaller ports,like Gold Coast and Hobart, were all functions were contracted out,Qantas will retain their own check in staff.

  • Darren

    says:

    To Steve A…….

    Could you please advise in a comment WHY you hate QANTAS & its’ CEO Alan Joyce so much?
    Your input, over the last many, & in several months’, always has such nasty wording against them both, so there must be reasons’.
    Please explain.

  • Trevor

    says:

    To Graham Paterson, above….

    Firstly, it’s a very good idea to read your comment, before submitting, to check for grammar & spelling errors’, of which you’ve several. You lose respect by not doing so.

    Secondly, QANTAS CEO Alan Joyce is an Australian Citizen, so why should he ‘be sent packing back to where he came from’???

    Thirdly, its always a good idea to check facts’ prior commenting. If you had done so, you’d know this.

  • john

    says:

    QANTAS is the New Spirit of Australia, weakest to the wall, rich get tax cuts and business grants, the poor get poorer.

  • Mitch

    says:

    To Mark Dale….

    You think?
    You summations’ are wrong in every aspect.

    QANTAS is moving ahead, rapidly. It’s shoring-up for the future, in every way possible. It’ll leave others’ in its’ wake turbulence.
    By FY21, a profit will be showing.

  • Carlton

    says:

    So Jack, you think QANTAS is wrong in cutting costs to ensure its’ longevity?
    It’s called ‘business’, & the Airline won’t be the only one doing as much as possible to stay solvent, in this apocalyptic world in which we now find ourselves.
    EVERY business/company will, THROUGHOUT the WORLD!

    Can you stop thinking so naively, & realise what is happening is just so monstrous, the like of which hasn’t happened in the modern world.
    It is real, & it is NOW! Learn to live with it!

  • Peter

    says:

    Wow, the Union admitting they could do the job with 900 less staff. No wonder QF saw an opportunity to outsource.

  • Jabiru Joe

    says:

    Australia is still the best country in the world. It is such despite the ongoing costs incurred, that we are still suffering from, by the Whitlam government. They rolled to their union partners then by overpaying and over funding to an extent we were unable to.pay for it because of the uncompetitive place we were put in. Now, as we have in the past, we must do unpleasant things to survive in the global competitiveness that is the marketplace. Reality check.here

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