Qantas has announced 5,000 job cuts after suffering heavy financial loss. This is being done with plans to cut cost by A$2bn ($1.79bn: £1.80bn) over the next two years.
The cuts were announced alongside an underlying pre-tax loss of A$252m for the six months to the end of December. There are plans to cut fleet by more than 50 aircraft as it has faced tough competition in both international and domestic operations.
Alan Joyce, the Qantas chief executive said that the airline was facing some of the toughest conditions; he felt that it would demand some action to cope with the unprecedented scope and depth to cope up with the Australian aviation industry.
Qantas feels that overseas investments needs to be encouraged as foreign ownership of airlines is limited to 49% and it is trying to convince the Australian government for financial support.
Domestic rival Virgin Australia is largely owned by three government-backed operators – Air New Zealand, Etihad and Singapore Airlines.
The Australian domestic market has been distorted by current Australian aviation policy. Qantas has been undertaking its biggest ever transformation over the past four years, cutting comparable unit costs by 19%, but this is not enough for the circumstances that the airline is facing.
The airline warned in December that losses in the first half could reach A$270m, citing “immense challenges” from record fuel costs, a strong Australian dollar and fierce competition.
Not long after that earnings alert, two ratings agencies – Moody’s and Standard & Poor’s – downgraded the airline’s credit rating to below investment grade.
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