The cuts announced Thursday account for 20% of Qantas’ total workforce of 29,000 people, according to the company. They will primarily affect the airline’s corporate, ground and flight staff, while another 15,000 workers will remain on furlough “until flying returns,” it added. Jetstar, the company’s budget carrier, will also be affected.
The new measures are expected to help the company lower costs by 15 billion Australian dollars ($10 billion) over three years. After that, it’s targeting 1 billion Australian dollars (roughly $686,000) in recurring savings each year.
Qantas shares, which have fallen 41% this year, were halted from trading in Sydney on Thursday as it made the announcement. Its fundraising plan will involve offering an additional 1.36 billion Australian dollars (about $933,000) worth of shares to institutional investors, at about a 13% discount to the stock’s closing price Wednesday.
The remaining $500 million will be sought through a separate share sale plan offered to existing investors.
To lead the turnaround strategy, CEO Alan Joyce has also agreed to stay in his role through the end of the 2023 fiscal year.
“Right now, all airlines are in the middle of the biggest crisis our industry has ever faced,” Joyce said in a statement. “The impact will be felt for a long time.”
Australia’s Services Union, though, argued Thursday that it was “too soon” for Qantas to slash jobs — and called on both the airline and federal government to protect workers’ salaries.
“This announcement by Qantas is premature,” the group said in a statement. “The Australian economy cannot afford a significant contraction of the aviation industry.”
Joyce said during the company’s announcement that “the crisis has left us no choice.”
“The collapse of billions of dollars in revenue leaves us little choice if we are to save as many jobs as possible, long term,” he said in his statement. “We have to position ourselves for several years where revenue will be much lower. And that means becoming a smaller airline in the short term.”
Travel sector hit
There is one glimmer of hope: Australia’s domestic travel market is showing signs of life as lockdown restrictions gradually lift around the country. Qantas has said that it is seeing increasing demand for travel within Australia — the company’s domestic passenger numbers within the country doubled last week to 64,000 people.
Authorities in Australia are also expected to lift state border closures next month, which Qantas expects will help boost local travel even more.
“Once that happens, we can get more of our people back to work,” Joyce said.