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Qantas axes 5000 jobs

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Qantas will axe 5000 jobs after posting a $252 million first half loss, and unions say almost all of the airline’s Adelaide ground workers will be offered redundancies.

The airline says the full time job cuts are part of its a bid to cut $2 billion in costs over three years to 2017.

Almost all the 250 Qantas ground workers at Adelaide airport will be offered voluntary redundancies, according to officials of two unions.

About 100 baggage handlers and 150 service staff, including check-in workers, were informed by management of the redundancies on Thursday morning, they said.

Qantas had previously announced that 150 jobs would go when Adelaide’s Q-Catering facility closed at the end of March.

SA/NT Transport Workers Union aviation organiser Matthew Spring said the baggage handlers were in shock and angry.

“They feel they are being punished again after they improved productivity after the last round of redundancies,” he told AAP.

“My opinion is that if 100 baggage handlers put up their hands, Qantas will take all 100.”

SA/NT Australian Services Union secretary Joseph Scales said the 150 services workers also were shell-shocked and angry.

“They feel flat, they feel a bit let down,” he told AAP.

“Many of them have been with Qantas for more than 20 years. They cared for the national carrier.”

Scales said Qantas had not consulted with the union, which had to watch the stock exchange announcement like everyone else.

The SA government has not responded to calls about the Qantas announcement.

A wage freeze for Qantas executive put in place in December will continue and be extended to all of the group’s employees.

Qantas also plans to cut capital expenditure by $1 billion over the next two financial years and make big changes to its fleet and network.

It earlier announced it would hand back its Brisbane Airport terminal lease for $112 million, although it will retain exclusive use of most of northern end of terminal until 2018.

Of the planned job cuts, Qantas says 1500 will come from management and non-operational roles.

The remainder will come as a result of changes to the fleet and network, the restructure of maintenance operations and the restructure of catering facilities.

“I regret the need for these wide ranging job losses, but we will do everything we can to make the process easier for employees who leave the business,” CEO Alan Joyce said.

The airline says more than 50 aircraft will be deferred or sold, with older planes like 747s to be retired early and orders of A380s and B787-8s to be delayed.

It will also axe underperforming routes including its Perth to Singapore service, while timing and aircraft changes will be made to other routes.

The carrier’s underlying $252 million loss was at the bottom end of the $250 million to $300 million range flagged in December.

But it was still a sharp deterioration from the $192 million full-year underlying profit it recorded for the 2012/13 financial year.

Mr Joyce said the result was unacceptable.

“We must take actions that are unprecedented in scope and depth to strengthen the core of the Qantas Group business,” he said.

Mr Joyce said the airline continued to see major opportunities for its subsidiary Jetstar in Asia, despite challenging conditions and calls for it to exit the market.

However, Jetstar Asia would suspend its expansion in Singapore until conditions improved.

“Jetstar has been a pioneer Australian brand across Asia and we continue to see major opportunities for it in the world’s fastest-growing aviation region,” Mr Joyce said.

Mr Joyce again hit out at rival Virgin, which counts three foreign airlines – Etihad, Singapore Airlines and Air New Zealand – among its owners.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines yet retain access to Australian bilateral flying rights,” he said.

“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia…. that capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.”

Qantas has been lobbying the federal government for non-cash support.

The government is drafting changes to the Qantas Sale Act, which could give the carrier room to move some operations offshore and attract more foreign investment.

It could also be given a government debt guarantee, which would reduce its borrowing costs.

Qantas said it had a total liquidity of $3 billion, including $2.4 billion in cash reserves.

THE QANTAS QUANDARY

What’s happening?

* Qantas has racked up a large profit loss for the first half

* Tougher competition, soft consumer demand and costs are all taking their toll

* The airline also blames an uneven playing field in Australia, saying it gives Virgin an unfair advantage

* It can’t go on and the airline must take tough decisions, according to CEO Alan Joyce

What’s it going to do?

* Strip $2 billion off the cost line over three years to 2017

* This means another 4000 jobs will go, on top of the 1000 announced in December

* All Qantas group employees, including EBA staff, will take a wages freeze

* No pay rises or bonuses will be paid until full year earnings return to the black

* Capital expenditure will be cut by $1 billion

* Aircraft will be sold or orders delayed, affecting more than 50 planes

* Underperforming routes will be scrapped, including Perth-Singapore

* Growth of Jetstar Asia has been suspended

* Assets are under consideration for sale, but no firm decisions yet

* The Brisbane terminal lease will be handed by to the airport, discussions continue for a similar move at Melbourne and Sydney airports

What jobs will be affected?

* Of the 5000 jobs to go, about 1500 involve management, non-operational roles

* Headcount to be reduced by 4000 by 2015, rising to 5000 by 2017

* Other positions will be affected by fleet and network changes

* Line maintenance positions will also be affected by a planned restructure

* The Avalon maintenance base and Adelaide catering facilities closures, previously announced, are also in the mix

* Redundancy costs are forecast at $500 million

How about customers?

* Joyce is adamant service to customers won’t be compromised

What’s the federal government’s role?

* It’s considering some options to help level the aviation playing field in Australia for Qantas

* These include changes to the Qantas Sale Act and a government-backed debt guarantee

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