Qantas to cut 6000 jobs, 15,000 stay stood down

Qantas will slash 20 per cent of its workforce, or a total of 6000 jobs, with international flights not expected to resume for 12 months.

Qantas staff at the Brisbane domestic terminal. Picture: Adam Head

Qantas Group CEO Alan Joyce is not expecting international flights to resume in any real volume until July 2021, unless a vaccine for COVID-19 becomes available.

The grim prediction followed the group’s announcement that 6000 jobs were set to go from the airline and another 15,000 people would remain stood down for some time.

The job cuts represent 20 per cent of the Qantas and Jetstar workforce, and will predominantly come from ground staff, engineering, cabin crew and administration.

Mr Joyce said discussions with the Prime Minister and Treasurer were ongoing with regard to extending the jobkeeper payment, or another allowance specifically for industries disproportionately affected by COVID-19.

He said Qantas had announced the job cuts before that government decision was made, to give Canberra and workers clarity about the size of the airline’s issue.

“Our people have been asking to give us certainty, let us know what’s going to happen and we needed to do that. We couldn’t wait,” Mr Joyce said.

While domestic operations were likely to see another 8000 or so staff stood up by the end of the year, the outlook for others was less clear due to the global health crisis.

“We have to be realistic about it and seeing what’s happening in the rest of the globe it will probably be an extended period of time before we’ll open up those borders,” said Mr Joyce.

“We’re keeping ourselves ready. We can always activate the 787s and the A330s if the market opens up earlier but for the purpose of this plan we are working on international operations not starting in any real size … until July next year.”

Qantas Group CEO Alan Joyce and CFO Vanessa Hudson provide details on the Group’s post-COVID recovery plan: https://bit.ly/2Z4NSSZ Livestream courtesy of Sky News Australia.

Posted by The Australian on Wednesday, 24 June 2020

A380 crews faced the longest wait, with Mr Joyce suggesting the superjumbos would not be needed for at least three years.

Until then, he said the airline’s 12 A380s would be stored in the Mojave Desert in California.

Mr Joyce said Qantas would avoid compulsory redundancies if possible, but $600m had been set aside for those who wanted to exit the company.

Talks were also underway with unions, particularly in relation to pilots, with regards to sharing the reduced workload among more staff for lower rates of pay.

“We do want them to get back (to work) and how we get them back to work is really a discussion with the unions,” he said.

At the request of the board, Mr Joyce had committed to stay on as CEO for three more years, to see through the airline’s COVID-19 recovery plan that aimed to reduce costs by $15bn.

He said he would continue to accept no salary in July but had asked his fellow executive to take a salary of 85 per cent of their normal wage.

The executive team and board have not been paid since late March, and Mr Joyce said he had never seen them work harder.

“It’s made me very proud of what they’ve done and what they’ve achieved,” he said.

The airline group is also raising up to $1.9bn to strengthen its balance sheet and assist with recovery.

Mr Joyce said aviation was used to sudden shocks, but the industry had never seen anything like the current pandemic.

“Right now all airlines are in the middle of the biggest crisis our industry has ever faced,” Mr Joyce said.

“Airline revenues have collapsed, entire fleets have been grounded. And the world’s biggest carriers are taking extreme action just to survive.”

He said there was a need for the group to position itself for several years where revenue would be much lower which meant “becoming a smaller airline in the short term”.

“Adapting to this new reality means some very painful decisions,” said Mr Joyce.

“The job losses we’re announcing today are confronting. So is the fact thousands more of our people on stand down will face a long interruption to their airline careers until this work returns.”

What made it worse was that before the crisis hit, Qantas was actively recruiting pilots, cabin crew and ground staff, Mr Joyce said.

“We’re now facing a sudden reversal of fortune that is no one’s fault, but is very hard to accept,” he said.

“This crisis has left us no choice but we’re committed to providing those affected with as much support as we can.”

The airline would try to avoid compulsory redundancies as much as possible, and provide “large severance payouts for long serving employees in particular”.

“As we’ve done throughout this crisis, our decisions are based on the facts we have now and the road we see in front of us,” Mr Joyce said.

“Our plan gives us flexibility under a range of scenarios, including a faster rebound or a slower recovery.”

After the recapitalisation plan including a $1.36bn institutional placement and $500m share purchase plan, the Qantas Group’s available liquidity was expected to be in the vicinity of $4.6bn.

The airline previously raised $1.55bn in bank loans against its wholly-owned Boeing 787-9s.

Despite the massive hit to revenue in the second half of the 2020 financial year, Qantas was expecting to break even or record a small underlying profit before tax.

The ongoing strength of the Qantas Loyalty program was key to this, with only a 5 to 10 per cent reduction in earnings compared to the 2019 financial year.