Australia’s Qantas said on Thursday that it would implement a massive $10 billion cost-cutting program in response to the Covid-19 crisis, which will include jobs cuts of at least 20 per cent of its total workforce and the grounding of at least 100 planes for at least a year.
The program also involves half the company’s 29,000 staff remaining on leave for months which is also an essential part of a three-year plan to save Australia’s flag carrier from “the biggest crisis our industry has ever faced”, said the airlines CEO Alan Joyce.
“This year was supposed to be one of celebration for Qantas. It’s our centenary,” Joyce said in a statement. “Clearly, it is not turning out as planned.”
Qantas has already been forced to cancel nearly all its international flights until at least October and slash domestic routes because of the novel coronavirus pandemic.
It is expected that international air travel to and from Australia will remain closed to most passenger traffic until next year even though there has been a slight pickup in domestic travel after most Australian regions have able to contain the epidemic successfully.
But a reminder that the pandemic still remains a threat was realized a recent surge in new Covid-19 cases in Melbourne, Australia’s second-biggest city.
“We have to position ourselves for several years where revenues will be much lower. And that means becoming a smaller airline in the short-term,” Joyce said in unveiling the “post-Covid-19 recovery plan”.
Qantas expects that there would most likely be no international travel of any meaningful scale until July 2021, said Joyce and added that the only potential exception to this would be the proposed “travel bubble” between Australia and New Zealand.
Qantas also plans to raise up to AUD$1.9 billion ($1.3 billion) in equity in addition to the AUD$15 billion that the company hopes to achieve in cost-cutting.
Joyce said that both Qantas and its budget subsidiary Jetstar would be hit by the planned 6,000 job losses and the company is hopeful that at least half of the 15,000 staff that has been placed on leave since March would be able to return back to work by the end of the current year.
Non-operational and ground operations staff will account for about half of the jobs that would be axed while a mix of cabin crew, engineers and pilots will make up the remained of to-be-axed jobs.
Qantas said on Thursday about 150 of its aircraft have remained grounded since March because of the pandemic which includes most of its wide-bodied planes and about 100 of those will be kept grounded and thus out of service for at least a year.
With different Australian states reopening their borders to air travel, Qantas has started to ramp up its domestic fights and expects that by the end of July, the airline would be able to achieve 40 per cent of its normal capacity. It also expects to reach about 70 per cent capacity by the next financial year and 100 per cent by 2022.
“The last thing I wanted to do is leave when we are in the biggest crisis in our history,” said Joyce.
(Adapted form ChannelNewsAsia.com)