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.
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.
“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.”
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.