SYDNEY: Australia’s Qantas is axing at least 20 per cent of its workforce and grounding 100 planes for at least a year in a US$10 billion cost-cutting blitz in response to the COVID crisis, the airline announced Thursday (Jun 25).
CEO Alan Joyce said the three-year plan to save Australia’s flag carrier from “the biggest crisis our industry has ever faced” would also see half the company’s 29,000 staff remain on leave for months.
“This year was supposed to be one of celebration for Qantas. It’s our centenary,” Joyce said in a statement.
“Clearly, it is not turning out as planned.”
The coronavirus pandemic had already forced Qantas to cancel nearly all its international flights until at least October and slash domestic routes.
While domestic travel is beginning to pick up as most Australian regions have successfully contained the epidemic, the country’s international borders are expected to remain closed to most passenger traffic until next year.
And a recent surge in new COVID-19 cases in Melbourne, Australia’s second-biggest city, has served as a reminder that the pandemic remains a threat.
“We have to position ourselves for several years where revenues will be much lower. And that means becoming a smaller airline in the short-term,” Joyce said in unveiling the “post-COVID recovery plan”.
Joyce said Qantas was taking a “realistic” view that there would not be international operations of real scale until July 2021, with a proposed “travel bubble” between Australia and New Zealand a potential exception.
In addition to the AUD$15 billion in cost-cutting, the plan includes raising up to AUD$1.9 billion (US$1.3 billion) in equity.
The 6,000 job losses will hit both Qantas and its budget subsidiary Jetstar, while the company hopes half of the 15,000 staff placed on leave since March will be back at work by the end of the year, Joyce said.
Around half of those axed will be non-operational and ground operations staff, with the remainder a mix of cabin crew, engineers and pilots.
Qantas grounded around 150 aircraft in March, including most of its wide-bodied planes, and 100 of those will remain out of service for at least a year, it said Thursday.
It has begun ramping up domestic flying as state borders reopen and expects to reach 40 per cent of normal capacity in July, an average of around 70 per cent next financial year and 100 per cent in 2022.
With international operations on hold, Qantas will take an impairment charge of up to A$1.4 billion, mostly due to its fleet of 12 Airbus SE A380s, which Joyce said were not expected to fly again for at least three years and would be sent to the Mojave Desert for storage. The carrier will initially use its smaller A330s and 787s when international operations resume, he said.
Joyce, who has led Qantas since 2008, has agreed to remain chief executive until at least June 2023.
“The last thing I wanted to do is leave when we are in the biggest crisis in our history,” said Joyce, who oversaw a grounding of the airline’s entire fleet in 2011 over a pay dispute and led a subsequent cost-cutting turnaround plan.