Qantas to cut 5,000 jobs after posting A$252 million pretax loss
Reuters in Sydney
Australian carrier Qantas Airways plans to cut 5,000 jobs, or 15 per cent of its workforce, sell older jets and reduce capital spending after reporting a first-half loss amid growing competition in both international and domestic operations.
The deep cuts are part of Qantas’ plans to slash costs by A$2 billion (HK$14 billion) over the next three years – an attempt by the airline to convince the federal government and investors it is worthy of the state assistance it says it needs.
Qantas is seeking a government debt guarantee to give it access to cheaper capital. Battered by high fuel costs and a strong Australian dollar, its credit rating was relegated to junk status last year amid a price war with arch-rival Virgin Australia.
The underlying loss before tax of A$252 million was in line with the A$250 million to A$300 million loss the airline warned last month it would report for the six months to December.
In the same period a year earlier, Qantas made a profit of A$220 million.
“For us, the composition [of the loss] is worse than expected, the leakage out of the international business is really surprising and we think that Qantas will find it very hard to articulate how it plans to stop this,” Peter Esho, chief market analyst at Invast Financial Services, said.
“It’s clear that the market Qantas operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” chief executive Alan Joyce said in a statement.
Qantas claims Virgin’s access to foreign funding, via its major shareholders Etihad, Singapore Airlines and Air New Zealand, has put Virgin at an advantage.
Of the 5,000 jobs to go, 1,500 were management and non-operational roles, the airline said.
Wyn Li, Hong Kong general manager at Qantas, said since the restructuring programme focus mainly on the headquarters, the impact on the Hong Kong office is minimal.
“Hong Kong already finished the necessary restructurings when the Hong Kong-London route was cut two years ago, followed by the suspension of the Hong Kong-Perth route last year,” Li said.
Qantas has about 50 staff in Hong Kong to support daily services to Sydney, Brisbane and Melbourne.
The airline’s joint venture Jetstar Hong Kong, a low-cost carrier that is pending approval from the city’s government, said its staff will be intact.
“Qantas is just one of our shareholders, and since the investment on us is even smaller than the price of a A320, we won’t be affected by the cost-cutting plan,” a Jetstar representative said.
The low cost carrier has 70 staff in Hong Kong, including senior management, post holders required by the regulators and general supporting staff.
Additional reporting by Charlotte So