Australia's Qantas announces cull at the flying kangaroo Reporting Airbus plane orders

Aug 16, 2011, 9:57 GMT

Sydney - Qantas Airways Ltd said Tuesday it was slashing jobs and routes, delaying orders and moving operations overseas in a bid to restore profitability.

The news lifted shares in the national carrier off recent lows, but labour unions warned of industrial strife.

'To do nothing, or tinker around the edges, is not an option,' Qantas chief executive Alan Joyce said.

'Our share of the Asian international market has collapsed to 14 per cent, our profitable international routes are not sufficient to make up the shortfall and our cost base is around 20 per cent higher than our key competitors.'

Around 1,000 jobs are to go, delivery of six Airbus A380s has been put off for six years, four Boeing 747s will be retired early and there will be more reliance on partners like American Airlines Inc and Malaysia Airlines to carry passengers beyond what Joyce called its 'gateways' in North America and Asia.

'We're choosing the world's leading airlines to help us take our customers to their favourite places around the world and to their key business destinations,' he said.

Joyce also announced a new low-cost carrier in Japan to be run in partnership with Japan Airlines Co and industrial behemoth Mitsubishi.

Qantas will also start a new joint-venture premium airline, with an initial batch of 11 A320 aircraft, that analysts tipped would be based in Kuala Lumpur and have investment from Malaysia Airlines.

'We'll be offering same-day services to and within Asia and overall frequencies to Asia from Australia will grow,' Joyce said of the new premium brand.

'Until now Qantas has been a home-and-away business; now we're making the transition to a regional and global business.'

Joyce also announced an order with Airbus for up to 110 new aircraft in the A320 class. Between 28 and 32 of the planes would be current generation and 78 would be the next-generation A320neos.

He described the fuel-efficient neos as 'the most sought-after aircraft on the planet.'

Delivery of Qantas' final six A380s will be postponed for up to six years to help shore up the company's balance sheet.

Transport Workers Union boss Tony Sheldon blasted the shrinkage of the Qantas brand and the cost-cutting measures, warning that standards would fall and safety would be jeopardised.

'What they've decided to do is go the low road: go to third-world standards, third-world training and third-world safety,' he said.

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