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Qantas on ‘life support’ with biggest job cuts in its history

Qantas has put itself on life support, axing a fifth of its workforce and grounding most of its international fleet to survive the coronavirus crisis.

Jun 25, 2020, updated Jun 25, 2020
Outgoing Qantas CEO Alan Joyce. (Photo: AAP Image/Bianca De Marchi)

Outgoing Qantas CEO Alan Joyce. (Photo: AAP Image/Bianca De Marchi)

The national carrier will immediately shed 6000 jobs, more than at any other time in its 100-year history.

The cuts are part of a drastic three-year plan to slash costs by $15 billion.

Almost 15,000 other staff will remain stood down without pay or on enforced leave.

It’s hoped about half of them will be back at work by the end of the year.

But the other half – mostly attached to international operations – have no clue when they might get a regular income again.

Qantas is pushing the federal government to extend its Job Keeper scheme, or something like it, to the airline.

A grim-faced Alan Joyce outlined the survival plan on Thursday.

He does not expect the airline to resume international services in any significant way for another 12 months – July next year at the earliest.

The International Air Transport Association believes a full recovery of global air travel will take three years – without a second wave of coronavirus.

“The collapse of billions of dollars in revenue leaves us little choice if we are to save as many jobs as possible, long term,” the Qantas Group CEO told reporters.

“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.”

Mr Joyce said vital signs were strengthening for domestic operations and the airline has “extremely bright prospects for recovery”.

But to get there, the carrier will have to raise $1.9 billion through a share sale to balance its books.

Other drastic action includes grounding at least 100 aircraft for up to 12 months, including most of the international fleet.

Staff attached to the airline’s 12 A380s face the longest wait, with the super-jumbos to be grounded for at least three years and stored in the Mojave Desert in California.

Mr Joyce promised generous redundancy payouts, worth $600 million, to the 6000 who’ll lose their jobs – a mix of cabin crew, engineers, ground workers and corporate staff.

Voluntary redundancies will be offered before people are tapped to leave.

“They are jobs that we don’t see coming back for a long time,” Mr Joyce said.

For now, Qantas is focusing on green shoots, domestically.

“We’re planning to be back to 40 per cent of our pre-crisis domestic flying during July and hopefully more in the months that follow,” Mr Joyce said.

He said the opening of state borders was crucial to the plan, and negotiations with state and territories were ongoing on how to manage public heath risks.

“This year was supposed to be one of celebration for Qantas. It’s our centenary. Clearly, it is not turning out as planned,” Mr Joyce said.

The three-year plan aims to have 21,000 active employees by June 2022. The Qantas Group currently has 29,000 staff.

IMPACT ON THE QANTAS WORKFORCE:

* Some 6,000 jobs to be cut from the group’s 29,000 workforce, equivalent to 20.7 per cent.

* Separate to the job losses, 15,000 staff will remain stood down without pay, on leave without pay or on annual leave, as applicable, for some time.

* The job losses and stand down measures affect both Qantas and Jetstar.

* Qantas will offer voluntary redundancies and career support for those laid off.

* Some 8,000 staff are expected to return to work by the end of July.

WHERE THE JOB LOSSES WILL BE:

* 1,450 in non-operational roles, mainly corporate.

* 1,500 in ground operations, such as baggage handling and ramp operations.

* 630 in engineering operations.

* 220 pilots.

* 1,050 cabin crew.

COST REDUCTIONS AND REDUCED FLIGHT OPERATIONS:

* Qantas wants to reduce costs by $15 billion over three years due to reduced aviation activity.

* Around 100 aircraft to be grounded for up to 12 months, some for longer.

* Qantas will retire its six remaining Boeing 747s, six months ahead of schedule.

* All international flights, except to New Zealand, are cancelled until at least late October.

CAPITAL RAISING:

* Plans to raise $1.9 billion through a share sale.

* Share placement issue price is $3.65 per share, which is 12.9 pct above Wednesday’s close of $4.19

* Proceeds will be used to fund the Qantas Group’s recovery from the economic impact of the pandemic.

-AAP

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