BY JAMES WILKINSON
Qantas has withdrawn from the Singapore-Mumbai and Auckland-Los Angeles routes as part of a network and maintenance shake-up announced by CEO Alan Joyce in Sydney yesterday (Feb 16).
Joyce said the company’s International business remained a going concern and the suspension of the two routes comes alongside pre-announced cuts of flights from Bangkok and Hong Kong to London in favour of codesharing with British Airways.
“Qantas International remains a weakness and a key focus,” Joyce said. “The reality is that even the strengths of the rest of our business will not be able to compensate for this issue over the long term.
We face high competitor capacity growth into Australia (and) while we have a strong outbound travel market, the inbound market is flat and in particular there is a softening of demand for travel out of the UK and Europe.
“The challenges are structural and ongoing which is why last year we developed our five year plan for building a better and stronger Qantas… it is now being implemented and in some areas accelerated,” he said.
The network changes were announced as Joyce revealed Qantas’s half-year results, which were hit hard from industrial action during 2011.
Joyce said the Qantas Group delivered an underlying profit before tax (PBT) of AUD$202 million, which is down from AUD$417 million for the first half in the previous year, while statutory PBT was $58 million, down from $322 million.
“The result highlights the unique challenges we faced during the period, with a $194 million negative impact due to industrial action and jet fuel costs up by $444 million,” he said.
“It also demonstrates our resilience as a business, with most parts of the Group delivering high-quality and even record performances.
“The Group’s yield performance was up 4% – despite the industrial action,” he said.
Joyce also announced several further network changes, including the early retirement of two Boeing 747-400 aircraft, the downgrading of Airbus A330 aircraft to Boeing 737-800s between Sydney and Auckland, the addition of A330s between Melbourne and Perth and allocating more A330s between Sydney and Perth, as well as an upgauge of aircraft between Los Angeles and New York from an Airbus A330 to a Boeing 747-400 featuring new A380 onboard product.
In a positive move for inbound tourism, Qantas is upgrading flights to Japan from Sydney to Boeing 747-400 aircraft that will operate daily flights.
Qantas’ proposed Asian-based airline is again no closer to launching, with Joyce saying the group continues to “evaluate the options for establishing a premium airline in Asia”.
The announcements came as Joyce said Qantas would shed 500 jobs, primarily in maintenance, due to aircraft retirements.
“We have no plan to move operations offshore but we need to consolidate our activities in Australia,” he said.
Joyce said the airline would be “consulting with the AMWU, AWU, ALAEA and other relevant unions over the next two months about options to address our heavy maintenance challenges”.