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Qantas to Slash Jobs, Cut Costs as First-Half Profit Slumps
February 16, 2012

Embattled Australian carrier Qantas announced Thursday it will slash jobs, cut costs and close two routes after posting an 83 percent slump in first half net profits. (AFP Photo) Embattled Australian carrier Qantas announced Thursday it will slash jobs, cut costs and close two routes after posting an 83 percent slump in first half net profits. (AFP Photo)
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Embattled Australian carrier Qantas announced Thursday it will slash jobs, cut costs and close two routes after posting an 83 percent slump in first half net profits.

The airline's result in the six months to December came in at Aus$42 million ($US44.8 million), compared to Aus$241 million in the previous corresponding period, due to high fuel costs and a global grounding of its fleet.

Chief executive Alan Joyce pulled all the airline's planes out of the skies for 48 hours last October as part of a row with staff over plans to shift the focus of its ailing international arm to Asia.

It cost the carrier dearly, but Joyce said it was the only option.

"The damaging industrial action we faced last year is over, and industrial action on that scale is unlikely for the foreseeable future," he said.

"Our decision to ground the fleet was made necessary because our customers were being massively disrupted by the unions and the ongoing campaigns by unions were damaging our brand."

The dispute was ultimately terminated by an order of the country's industrial relations umpire but it cost Qantas Aus$194 million in lost revenues and forward bookings.

In a bid to recoup the losses, Joyce said the airline's projected capital expenditure for full-year 2012 would be cut by Aus$200 million to Aus$2.3 billion and by a further Aus$500 million in 2012/13.

Savings will come from the deferral of new Boeing 787-800s due to manufacturer delays, and a reduction in planned domestic capacity growth.

This will see jobs cut as it makes changes to its engineering and catering services due to aircraft retirements and operational changes.

"We anticipate there will be 500 positions affected by the immediate changes that we have announced today," Joyce said.

"But let me clarify that there will be no jobs going offshore. Not one. The jobs that are going have become structurally redundant."

Joyce said the airline hoped to minimise compulsory redundancies and would focus instead on voluntary redundancies, using annual and long service leave and seconding staff to other airlines.

The airline will also axe services from Singapore-Mumbai and Auckland-Los Angeles in May.

"Looking forward, while the global economic situation remains volatile, we remain cautiously optimistic about the demand environment, both domestically and in the Asia-Pacific region," said Joyce.

"The results I have announced today show the resilience of the Qantas Group and our readiness for the future.

"Overall our business is strong, we are exerting financial discipline, and we are well placed to handle this complex economic and competitive environment."

AFP