More Qantas jobs to go if Vic outbreak delays ‘trans-Tasman bubble’
Qantas boss Alan Joyce has pledged to fight to prevent more job losses after a dark day at the national carrier yesterday. It comes as a US private investment giant has been confirmed as the new owner of Virgin Australia.
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Virgin Australia is set to become a smaller domestic airline under a new owner while at the same time Qantas boss Alan Joyce has pledged to fight to prevent more job losses at the national carrier.
American investment giant Bain Capital is now the new owner of Virgin Australia after its rival Cyrus Capital revealed it would withdraw from the process.
The American private investment giant was revealed as the winner this morning just hours after rival bidder Cyrus Capital announced its shock withdrawal.
The sale will be completed after the second meeting of creditors, which is scheduled for the end of August.
Deloitte Administrator Vaughan Strawbridge said the sale was an “important milestone and a significant achievement” for the airline.
“Bain Capital has presented a strong and compelling bid for the business that will secure the future of Australia’s second airline, thousands of employees and their families and ensure Australia continues to enjoy the benefits of a competitive aviation sector,” he said.
“The Virgin Australia Group entered administration as a direct result of an unprecedented global pandemic which all but grounded its operations whilst in the midst of a major transformation of the business led by Paul Scurrah and the management team.”
A return to shareholders has not been determined.
Meanwhile, Qantas boss Alan Joyce is ramping up calls to the Prime Minister to extend JobKeeper beyond September following Thursday’s announcement that 6000 jobs and $15 billion in costs at the national carrier would be cut over three years.
Mr Joyce told 2GB’s Ben Fordham this morning he was “devastated” about the decision, describing yesterday as “the worst day I’ve ever had in this job.”
When asked about the more than 15,000 employees who remained stood down, Joyce said he had “every intent” of keeping them in work – but the extension of JobKeeper beyond September was critical.
“That’s why a scheme like JobKeeper is really important to those 15,000 people,” he said.
It comes as the airline reveals it has raised almost $4 billion in equity on the share market – more than double its $1.9 billion call out on Thursday.
Joyce said the news was a boon for the company in what were very difficult times.
“It shows what a good company Qantas is. We’re oversubscribed for that last night to the tune of nearly $4 billion. We have the market available to us.”
The Qantas CEO also revealed he would continue to work without pay through July after agreeing not to take a salary or bonuses for the past three months – a move followed by the Qantas senior team and board.
Joyce did, however, foreshadow that he would start to receive a partial salary not long after this.
More Qantas workers face the sack if Victoria’s new coronavirus outbreak delays the resumption of interstate air travel and plans for a “trans-Tasman bubble”.
The cuts equate to 20 per cent of the airline’s workforce, but analysts said that was likely to rise if the Andrews government’s “suburban testing blitz” in Melbourne fails to curb new case numbers.
Airline Ratings founder Geoffrey Thomas said he expected more staff would lose their jobs unless Victoria got on top of the situation and the federal Government extended wage subsidies.
“It’s a very dynamic situation,” Mr Thomas said. “You’ve still got 15,000 people on furlough.”
Mr Thomas said there were also implications for travel across the Tasman.
“Joyce is expecting the New Zealand ‘bubble’ to go ahead. If it doesn’t then a lot of their plans will be scuppered,” he said.
Strategic Aviation Solutions chairman Neil Hansford said Victoria’s infection spike could see Queensland Premier Annastacia Palaszczuk “use it as an excuse not to open the borders”.
After Qantas made its axings public, Prime Minister Scott Morrison revealed a plan was being developed to provide financial help to the airline industry beyond the scheduled end of the JobKeeper subsidy in September.
The PM said he spoke with Mr Joyce on Wednesday evening and “was very clear … that we know that those sectors that continue to be significantly affected will need continued support and so we are just working through the best way to target and deliver that support”.
Responding to the PM, Transport Workers Union national secretary Michael Kaine said the airline’s employees were “much less interested in you extending your regrets and much, much more interested in you extending JobKeeper”.
Mr Kaine said some of Mr Joyce’s language was “offensive” and “outrageous”.
“What is right-sizing?” he said. “It’s just a buzzword to try to lift the share price of this company.
“Mr Joyce, you must put these redundancies on hold. It makes no sense for you to make hasty decisions about the shape of the workforce until you know the shape of the Government’s support.”
About 1500 head office jobs will be chopped; ditto in ground operations such as baggage handling. Cabin crew will fall by 1000, engineering by 630 and 220 mainly 747 pilots will be shown the exit.
Among Qantas’s 29,000 current staff, about 8000 will be back at work by the end of next month when domestic traffic was tipped to reach 40 per cent of usual before Victoria’s new outbreaks.
Another 7000 should return to their jobs by Christmas, provided states remove border restrictions.
Qantas expects 21,000 of its people will be active by June 2022, with the domestic market at 100 per cent by then.
The cost of mostly voluntary redundancies will be at least $600 million, paid from the $1.9 billion raised by selling 373 million new shares, mainly to major investors at $3.65 apiece. Qantas stock was put in a trading halt before the share market opened on Thursday, having last traded at $4.19.
The capital raising will dilute 84,000 small-time investors’ stakes by 20 per cent, plus the board has cancelled the second-half dividend payment of about 13c a share.
A $500 million retail share offer will open next month.
The price will be no more than $3.65, but could be lower if the stock falls in coming days.
The board also decided to ask Mr Joyce to stay on until 2023, by which time he will have been in charge for 15 years. He agreed.
Mr Joyce said it was unlikely there would be international travel of “any real size” until July 2021 and that it would be three years before there was a return to pre-pandemic levels.
“We’ve never experienced anything like this before, no one has,” he said. “All airlines are in the middle of the biggest crisis our industry has ever faced.” But he said he was optimistic about the future, in particular about the potential for non-stop flights that saved passengers time by cutting out stopovers that may entail stringent health and security checks.
Originally published as More Qantas jobs to go if Vic outbreak delays ‘trans-Tasman bubble’
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