Qantas sackings don’t augur well for Virgin staff

Qantas will cut at least 6000 jobs and continue to stand down 15000 employees as part of its plan to recover from the impact of the COVID pandemic. Picture: AAP

The announcement that Qantas is to lay off 6000 staff, and indefinitely stand down another 15,000, amid expectations of international travel being shut down for another year, has cast a sombre note over the sale of Virgin, now in its final days.

While Virgin’s administrator Deloitte’s Vaughan Strawbridge is well down the track with the sale — with a preferred bidder to be announced by next Tuesday — the funereal like announcement by Qantas chief executive Alan Joyce was a stark reminder that many thousands of jobs will be lost in the aviation industry in coming months from both Qantas and Virgin.

The question for Virgin’s 9000 staff is not if jobs will be lost, but how many will be shed in the inevitable restructuring which will happen regardless of which bidder wins — New York hedge fund Cyrus or private equity group Bain Capital.

Virgin’s unions have done a good job putting their case and pointing out that they have a say at the creditors meeting on August 21 which gets to vote on a proposal to be put forward by the administrator, given that the proposal had to be approved by a majority of creditors by number (aka Virgin’s 9,000 workers) as well as by value (the $7bn lenders and bond holders).

But Joyce’s announcement on Thursday was a stark reminder to Virgin’s unions of the limitations of their bargaining power in an airline industry recession.

If they don’t like what is on offer from Virgin’s new owners, there are now going to be another 6000 Qantas workers on the market looking for jobs.

In his speech entitled the “Qantas group post COVID-19 recovery plan”, Joyce used the recession era euphemism of “rightsizing” Qantas’ workforce — a word used all too often in the turbulent years in the wake of the 2008 global financial crisis which may come into vogue as chief executive after chief executive around the nation oversees new rounds of redundancies.

The stark reality of the Virgin sale — and the choice facing Strawbridge — is that the bidder which offers the most money for the airline, or its long-suffering $7bn in creditors, is most likely to be the one which takes the tougher line on long-term staffing and generosity around employee payments and working conditions.

Two of the four major unions — those representing engineers and cabin staff — have come out in support of Cyrus, believing it will do the best by their workers.

But the key Transport Workers Union has so far kept its powder dry, preparing to negotiate with whichever bidder is chosen by Strawbridge.

With so many jobs on the line, can the unions afford to clash with any new owner of Virgin who is fronting up with cash to buy it?

With the economy worsening as thousands of redundancies are being announced, with the threat of a new COVID-19 outbreak in Victoria and the JobKeeper set to end in September, Strawbridge is under increasing pressure to get the deal done as quickly as possible.

More importantly, he has to choose the bidder which provides the most certainty of delivering on its financial promises.

He will not want to pass Virgin onto its new owner in September, as currently scheduled, then have it collapse again.

While there were rumours on Thursday that Bain had won the bidding war, Strawbridge has been keeping his cards close to his chest.

The only good news of sorts for airline workers is that it does appear that the federal government is considering some extension of the JobKeeper program for airline workers beyond its current September finishing date.

The Transport Workers’ Union national secretary Michael Kaine argues that the airline industry is facing “going into freefall” if the JobKeeper allowances are not extended beyond September.

He hit out at the Qantas announcement, saying that it should have waited until the federal government review of a potential extension of JobKeeper before making the cuts.

“Before Qantas takes thousands of workers’ jobs down to the pawn shop it should be lobbying the federal government for an extension to JobKeeper and financial support to allow the airline to weather the crisis,” he said,

Joyce, he said, was too “quick to cut jobs and hang workers out to dry,” calling on Qantas to hold off on any redundancies until the federal government makes an announcement on JobKeeper.

“We have been calling on the government for months to step in with a national plan for aviation and they have refused,” he said.

“Qantas is now making hasty decisions to slash jobs which will affect thousands of families while Virgin is still limping along.

“Because the government is refusing to provide any certainty past September we are seeing the aviation industry go into freefall,” he said.

As he finalises his decision on Virgin, Strawbridge will want to be well out of his hot seat before things get worse.