Qantas Lays Off 6,000 Workers to Recover from COVID-19

QANTAS PARKS SURPLUS AIRCRAFT

Qantas Airways has unveiled a three-year strategy to prepare for a slow airline industry recovery, including cutting 6,000 workers, storing or retiring larger widebody airliners, and raising A$1.9 billion ($1.3 billion) in new equity to fund its plans.

Substantial job losses were widely expected as Qantas developed its blueprint to recover from the COVID-19 crisis. The 6,000 cuts—nearly 20% of its 29,000 workers—reflect the fact that the airline expects to be smaller than its pre-coronavirus size for the foreseeable future.

In addition to the permanent cuts, Qantas said an additional 15,000 of its workers will remain on stand-down until more of its services resume. The carrier estimates it will have 8,000 employees working by the end of July, growing to 15,000 by year-end and 21,000 by June 2022.

Employees on stand-down can use annual leave or receive funding under the Australian government’s JobKeeper wage-subsidy program. This program is due to expire in September, but Qantas CEO Alan Joyce said the government is considering extending the wage subsidies for airline and tourism workers.

The redundancies will be mainly in the group’s international operation, which is expected to recover much more slowly than the domestic business. The carrier has begun union consultations and aims to seek voluntary redundancies before turning to involuntary cuts.

Job losses will affect Qantas and its Jetstar subsidiary. The company is estimating the total will include about 1,450 non-operational and headquarters workers; 1,500 ground operations jobs; 1,050 cabin crewmembers; 630 from the engineering division; and 220 pilots.

The crew and engineering cuts partly reflect the airline’s decision to retire its six remaining Boeing 747-400s about six months earlier than planned. Some jobs also will be lost as low-cost subsidiary Jetstar shifts aircraft maintenance from its Newcastle facility to another in Melbourne.

About 100 of the group’s aircraft will remain grounded for at least a year, including most of the international fleet. The airline’s 12 Airbus A380s will be stored for at least three years. Qantas intends to return the A380s to service eventually, but for now they are too big to match anticipated international demand, Joyce said.

Qantas already has canceled all international flights until late October, with the potential exception of routes to and from New Zealand. The CEO noted it might take a year for international services to resume in any meaningful way. 

The exceptions will be the likely restart of flights to New Zealand this year and possibly some other similar bilateral “travel bubble” arrangements with other countries.

When international services do resume, the group will use its 787s and A330s to operate flights to North America, Asia and London as required, Joyce said. Qantas already has signaled it will be deferring 787-9 and A321neo deliveries due this year. The A321neos were on order for Jetstar.

The A$1.9 billion in new equity will comprise A$1.4 billion in a fully underwritten share placement with institutional investors and an A$500 million share-purchase plan for existing stockholders. This will result in a 25% increase in total issued shares.

The funds raised will be used to “accelerate the group’s recovery, strengthen its balance sheet and position it to capitalize on opportunities aligned with its strategy,” the airline said.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.