A dramatic Alan Joyce today revealed that the airline group would lose up to $300 million for the six months to Dec 31. “The challenges we now face are immense – we will do whatever we need to do to secure the Qantas Group’s future.”
Mr Joyce claimed “the Australian international market is the toughest anywhere in the world” and that these were the “toughest conditions Qantas has ever faced”.
Measures include sacking 1000 staff within 12 months, a CEO and Board pay cut, an exec pay and bonus freeze, a review of spending with top 100 suppliers plus further unspecified “network reductions”.
And conditions are worsening, he said, winding up the melodrama, with a marked deterioration in November.
Passenger loads and yields below the already negative trends for the year with the deterioration driven by a simple scenario: aircraft capacity continues to grow faster than passenger demand.
“Total passenger domestic market capacity is expected to increase by approximately 2.7%, driven by estimated competitor customer growth of 3.9%,” he said.
Group yield is expected to fall 3.5% year on year for the first half while fuel costs are forecast to increase by $88 million.
Mr Joyce also made numerous negative comments about major competitor Virgin Australia which it believes has an unfair advantage due to a high level of foreign ownership, something Qantas, which used to be government-owned, is barred from doing thanks to the Qantas Sales Act.
“Political leaders recognise Qantas’ strategic importance, its critical role in providing essential air services and the benefits to Australia of a strong and viable national carrrier,” he said.
“None of the measures being discussed with the government would alleviate the need for us to take the comprehensive actions we have announced today.
“Government action will, however, be key in enabling us to keep competing effectively on a level playing field.”