Andrew Heasley August 08, 2012
Qantas plans job cuts and alliances to remain profitable. Photo: AFP
Qantas chief executive Alan Joyce says the airline is taking its time to form an alliance with a major overseas carrier.
Mr Joyce also reiterated plans by the carrier to shed about 2,800 full-time jobs as part of a transformation of the airline - cuts that he said would result in $300 million in savings each year.
Speculation has been rife in recent months that Qantas was close to sealing a partnership with Dubai-based Emirates as part of its five-year strategy to improve its international operations.
Mr Joyce told a business lunch in Sydney an alliance was an important part of the airline's plans.
"But we only enter partnerships when we have the right arrangement for the long term," he said.
"In the current economic environment, taking our time with this part of our agenda will clearly not undermine our broader transformation plan."
Qantas shares, meanwhile, are up 2.5 cents, or 2.2 per cent, to $1.16.
The Qantas job cuts will amount to more than 10 per cent of its workforce, across its engineering, maintenance and catering operations.
‘‘There is no doubt that the cost of transition is big,’’ Mr Joyce said.
Pledging to return the loss-making Qantas International division to profit in three years, Mr Joyce said he expects the airline to report a ‘‘statutory loss’’ in its annual results later this month.
The loss reflected high fuel prices, its restructuring costs and ‘‘the cost of the industrial dispute’’, he said.
The Qantas cutbacks include job losses, previously announced, stemming from:
But passengers are increasingly shunning the Flying Kangaroo, as Qantas’ share of international travel to and from Australia shrinks while foreign airlines mop up, latest official government figures for May show.
Qantas’ share of Australia’s international passenger market for May declined to 18.4 per cent, down from 19.2 per cent in May last year (and down from 20.2 per cent in May 2010) - although it still enjoys nearly double the market share of its nearest rival.
Meanwhile Singapore Airlines, Emirates and Air New Zealand increased their share of Australia’s international travel, data from the Bureau of Infrastructure, Transport and Regional Economics shows.
Qantas attributed its decline to overseas airlines’ lower overheads.
‘‘While Qantas remains extremely strong in the domestic market, increased competition from Asian and Middle Eastern airlines with lower cost bases has reduced our international market share,’’ a Qantas spokesman said. ‘‘This underlines the importance of the transformation plan that Qantas announced last year to turn around our international business.’’
Singapore Airlines, retaining its number-two ranking, carried 9.4 per cent of Australia’s international air traffic, up from 8.8 per cent in May last year.
Another big mover was Emirates, up from 7.7 per cent share to 8.3 per cent in May.
Qantas’ shrinking passenger share is not confined to the Red Tail operations. When combined with Jetstar and Jetstar Asia, the group’s share of international travel in and out of Australia fell to 26.8 per cent in May, down a full one per cent from 27.8 per cent a year earlier.
Mr Joyce also defended his strategy for the airline, which will result in mass job losses.
"What you have seen in media headlines may have left you with the impression that our response to the challenges before Qantas is to retreat, or just cut back," Mr Joyce said.
"That's not the case.
"We are undertaking a wholesale transformation of Qantas to make it better and stronger, the premium Australian airline for our times."
BusinessDay with AAP