PAUL PHELAN / CAIRNS
Australian flag carrier fears 'draconian' powers will handicap its competitive behaviour
Qantas will slash 1,500 to 2,000 staff from its payroll next month, cutting international services further to bring its capacity reductions since the terrorist attacks on America to around 11%. The carrier has also reacted angrily to a request for extensive state aid by a consortium attempting to take over its bankrupt rival Ansett.
New York flights will be withdrawn from 25 November; frequencies to Bangkok, Buenos Aires, Johannesburg, Manila, and Rome, will be reduced; Frankfurt and Paris services will be merged; and the carrier's five remaining Boeing 747-200s will be retired from April, 18 months earlier than planned.
Chief executive Geoff Dixon says Qantas, while benefiting from a larger domestic market share following the collapse of Ansett, is still principally an international airline, with 75% of last year's profits generated by overseas operations: "The events of 11 September have affected services far beyond the USA. Bookings from Japan are down 25% and from the UK 23%. Other markets are similarly affected and overall traffic levels have declined market by market by 10-20%."
Other economies will include seeking a wages freeze for 12-18 months; the cost efficiencies expected from recently ordered Boeing 737-800s and substantial changes to the domestic product offering.
Qantas is also moving large numbers of staff from international to domestic operations. Dixon says the moves are designed to bolster decisions made last month to respond to the international aviation downturn, to lower its cost base and to strengthen its position to take advantage of the inevitable recovery of the international aviation market.
Disappointing results and the prospect of an airline slump had first seen Qantas move to cut costs last February when around 5% of its 30,000 workers were laid off and international routes suspended. The latest announcement will see a similar number of jobs disappear.
While taking moves to cut its own operation's costs, Qantas has protested vigorously over a long list of conditions placed before the government by Melbourne millionaire businessmen Lindsay Fox and Solomon Lew - the only remaining bidders for Ansett's assets.
The A$3.5 billion ($1.76 billion) bid still hangs on government approval for conditions including conversion of a A$195 million government loan for Ansett employee entitlements into a one-off grant; tax concessions and major changes in consumer protection legislation to allow the Australian Consumer Competition Commission to act against Qantas if its actions had the effect (rather than the intent) of disadvantaging competitors.
That proposal drew a sharp response from Qantas chairman Margaret Jackson, who says: "At a time of unprecedented turmoil in the aviation industry, now is not the time to experiment with extremely wide and draconian powers that do not, and cannot, adequately distinguish between legitimate and efficient behaviour and anti-competitive behaviour. Handicapping Qantas' competitive behaviour may be beneficial to the private interests of Ansett's proposed new owners, but it iscontrary to the national interest."
Despite the government's warning it will be sparing with 'handouts', transport minister John Anderson, who met Ansett administrators in Sydney on 13 Novem-ber, emerged from the meeting saying he believed "we are going to be able to put things together".
The bid is also expected to be based on the outsourcing of major maintenance and other former Ansett functions, probably involving links which had been established with Air New Zealand (ANZ) engineering before Ansett's collapse. Former Ansett owner ANZ has struck a provisional deal to provide Ansett with code-sharing, an interline agreement and other commercial links.
Source: Flight International
