Money Matters - Simplified

500 will be unemployed from Qantas

photo of Qantas Airlines

An alarming situation arises as Qantas decided to cut 500 jobs for high fuel cost and weak demand in the market take a toll on the airlines profits.

Australia’s top airline Qantas Airways that was founded in Winton,Queensland on 16 November 1920 as "Queensland and Northern Territory Aerial Services Limited", said on Monday it is subtracting 500 jobs by merging maintenance facilities to save up to A$100 million annually.

They gave the reason that the high fuel cost and weak demand in the market has taken a toll on the airlines profits.

Qantas Airways Limited is considered as four-star airline by research consultancy firm SkyTrax. In 2011, Qantas was voted the eighth best airline in the world by the firm, a drop from 2010 that stood seventh.

Qantas still retains a 65 percent share of the Australian domestic market and carries 18.7% of all passengers traveling in and out of Australia.
Emerging from a costly industrial dispute, said in statement it will stop heavy maintenance in Tullamarine in Melbourne and concentrate on centers in Brisbane and Avalon. It had, in February, flagged another 500 job cuts for the group.

"The latest move will save it A$70 million to A$100 million a year but will result in one-off costs of A$50 million. It also takes estimated costs of a repairing plan for the second half of fiscal 2012 to between A$250 million and A$260 million," said by one of the most oldest airlines tycoon, Qantas airlines.

The refurbishing plan is a bid by Chief Executive Alan Joyce to protect profits and the investment-grade rating of Qantas.

In the earlier month, this Ariel giant said that it would delay in taking the delivery of two new A380 and it is to cut the expenditure by further A$400 millions, by raising the cut to A$900 million.

"Like the manufacturing industry, aviation maintenance is a labor and capital intensive sector," Chief Executive Alan Joyce said in a statement to the press.

"Our cost base in heavy maintenance is 30 per cent higher than that of our competitors - we must close this gap to secure Qantas' future viability and success."

Evaluating the heavy maintenance, that was announced in the month of February while the Qantas said that its first half profit is divided, and follows the introduction of A380 super jumbo and the future plans for the new Boeing 787s.

"We cannot take advantage of this new generation of aircraft if we continue to do heavy maintenance in the same way we did 10 years ago," Joyce said.

More than 90 percent of Qantas's 30,000-plus employees are in Australia. Now the employee unions' fears that it will send jobs offshore helped spark last year's bruising industrial battle that led to the grounding of its entire fleet and prompted intervention by Australia's industrial arbiter.

Qantas shares, which were marginally higher before the announcement, had slipped 0.35 percent to A$1.425 at 0250 GMT. The broader market was 0.2 percent higher. ($1 = 1.0138 Australian dollars)

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