Qantas job cuts: ”It will be big and ugly”

Qantas’ heavily unionised workforce fears deep job cuts in the order of 3000 will be revealed next week when the airline’s management reveals how it plans to strip $2 billion in costs out of the business.

The looming job losses come amid a high-stakes lobbying campaign by Qantas chief executive Alan Joyce, who has been pushing for financial assistance from the Abbott government.

In December the airline warned it would slump to a half-year loss of up to $300 million, and that it would detail the extent of job cuts, which it said at the time would be at least 1000 this year.

But well-placed sources said on Friday they believed the job cuts – likely to include engineers and pilots – would be in the thousands.

”It will be big and ugly,” one said.

While they could not put a definite figure on the cuts, sources said they would be ”pleasantly surprised” if it was less than 2000 or 3000.

Qantas would not respond directly to questions of how many jobs would be axed, but put out a statement late on Friday noting a ”series of unsubstantiated and unsourced rumours swirling around ahead of our half-year results, ranging from estimates on job losses to route changes”.

The airline has denied rumours that it will reduce A380 services to London.

Mr Joyce warned last week that there were more ”hard decisions” ahead for the airline. He emphasised that the cost cuts he had to make were greater than those made by the much larger American Airlines when it was placed in bankruptcy protection in 2011.

Mr Joyce is under pressure from investors to reveal a credible way of cutting costs when he unveils Qantas’ half-year results next Thursday, a day before Virgin Australia reports.

”If they are going to cut costs, jobs will be a big part of that,” an analyst said.

Fairfax Media reported last week that the Abbott government was preparing to throw Qantas a lifeline in the form of a debt guarantee similar to the assistance provided to the banks during the global financial crisis.

Mr Joyce has been actively lobbying Coalition MPs for help, but Virgin Australia and Regional Express have demanded the government also help them.

Australian Services Union national secretary Linda White said that with 33,000 employees at the airline, speculation was rife about what the company could announce next Thursday.

But she said her union, which represents the largest bloc of about 9000 Qantas workers, would fight for every job.

“This is all speculation; we don’t know the facts yet. We have strong enterprise bargaining agreements and we will fight for every job,” she said.

Australian Licenced Aircraft Engineers Association president Steve Purvinas said he heard rumours on Friday that anywhere between 1000 and 10,000 jobs may go at the airline.

Mr Purvinas said this was a deliberate strategy to create uncertainty about the airline’s future. ”But for Qantas to return to profitability, they only need to make one person redundant: Alan Joyce,” he said.

”They have made very poor decisions on the type of aircraft they fly, they have withdrawn services from profitable locations like Frankfurt, and reduced services like London. These are the places where the aircraft were full.

”It appears to us that Qantas is deliberately losing money [to get the Qantas Sale Act changed] and simultaneously crying out for government handouts.”

The fears of deep cuts to the workforce come as the airline has ditched its long-standing code-share alliance with South African Airways on flights between Australia and Johannesburg.

The alliance has long been a bone of contention for regulators because Qantas and SAA are the only airlines with direct flights between the two countries.

Qantas will pull its code off SAA flights between Perth and Johannesburg at the end of May, while SAA will do likewise on the Australian airline’s daily 747 jumbo service between Sydney and Johannesburg.

It means Qantas passengers wanting to travel from Perth – which has a large South African expat community – to Johannesburg will have to fly on its alliance partner, Emirates, via Dubai.

Qantas shares rose 5 percent to $1.25 on Friday after Macquarie Equities analysts raised their recommendation on the stock to ”outperform”, noting now is ”the time to buy”.