Aggressive cost saving drove Qantas job cuts

‘Ambitious’ cost cutting targets rather than a toxic relationship with unions led to the outsourcing of 2400 jobs, a court has heard.

Qantas airport baggage handlers had their jobs outsourced to third party providers. Now their union is suing the airline saying it was done out of spite.

A senior Qantas executive has revealed the manager who made the decision to outsource 2400 ground staff would have had to find $100m in savings elsewhere if the airline had not agreed to the proposal.

Company secretary and general counsel Andrew Finch was giving evidence to the Federal Court, on the third day of hearings into the legality of the outsourcing decision.

The Transport Workers Union has alleged Qantas was motivated to get rid of ground staff because of the high concentration of union membership among the workers.

Under the Fair Work Act, being a member of a union or exercising workers rights are considered “prohibited reasons” for making employees redundant.

Mr Finch said Qantas’s relationship with the TWU had been “managed constructively” in his time despite union criticism of various airline decisions.

He was also questioned about the make-up and purpose of the General Management Committee which heard proposals for cost-cutting including the outsourcing plan.

He said senior executives sat on the committee but no minutes were taken, and there was on decision-making or accountability.

“It’s a forum where initiatives or proposals of the business are considered, feedback is provided, guidance is provided and risks are considered and concerns are raised in relation to proposals,” Mr Finch told the court.

With respect to the outsourcing proposal, he said several concerns were raised. These included a fear that it would be received poorly by the government because of the large number of job losses involved.

Barrister for the TWU Mark Gibian SC, asked Mr Finch if other members of the GMC had said “these risks are too high, we don’t think we should go ahead with the outsourcing” what would have happened?

Mr Finch replied that it was in the authority of Qantas Domestic and International chief executive Andrew David to not go forward with the proposal.

However he said that would have created another problem.

“Mr David was given very ambitious cost-saving targets,” Mr Finch said. “If he didn’t go ahead with this proposal he would’ve had to find $100m in cost savings elsewhere.”

The court also heard spirited discussion about what Judge Michael Lee should take into consideration in order to rule on the case.

The continues on Thursday.