Australia's Qantas to cut jobs after sharp fall in profit

Feb 16, 2012, 3:33 GMT

Sydney - Qantas Airways Ltd said it would cut 500 jobs and close some maintenance hangars after reporting an 83-per-cent fall in first-half net profit to 42 million Australian dollars (44 million US dollars) from 241 million Australian dollars a year earlier.

Revenue at Australia's biggest airline was up 6 per cent year-on-year to 8 billion Australian dollars in the six months to December from 7.5 billion Australian dollars.

Chief executive Alan Joyce said the temporary grounding of the fleet to force striking unions to the bargaining table in October had cost the carrier 194 million Australian dollars.

'If we'd done nothing, our brand would've been in trouble,' Joyce said. 'The action we took, though difficult, was necessary.'

He said Qantas would strive to maintain its 65-per-cent share of the domestic market while growing capacity overseas where its costs would be lower.

Its joint-venture budget airline in Japan would start flying in July but there was no progress to report on a plan to set up a new premium airline, probably based in Kuala Lumpur and involving Malaysian investment.

'We're still in dialogue with our potential partners there,' Joyce said. 'We'll come back to the market when we have conclusions on it.'

Joyce set unions an April deadline for agreements that would see staffing and work practices change to accord with the reduced maintenance schedules on modern aircraft.

'We don't maintain cars the way we used to, nor should we maintain aircraft like we did even 10 years ago,' he said.

His message was that muscling up to unions that want to preserve current practices would continue.

'We'll not be propping up the past at the expense of the future,' he said.

Shareholders did not receive a dividend but the prospect of a lower wage bill and other savings lifted the share price by 9 Australian cents to 1.64 Australian dollars towards the end of the session.

First-half earnings before interest and tax fell 60 per cent from a year earlier to 66 million Australian dollars. The company did not release a full-year forecast.

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