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And has (another) pop at Virgin.
Qantas has unveiled details of its $2 billion cost reduction program and capital expenditure review.
The airline has said it will take action to permanently reduce costs in all parts of the Qantas Group through to FY17, including fleet and network changes, productivity improvements, consolidation of business activities, new technology and procurement savings.
More than 50 aircraft will be deferred or sold and the group’s workforce will be reduced by 5,000 full-time equivalent positions by FY17.
The Qantas Group’s planned capital expenditure net of operating lease liability will be reduced to $800 million in both FY15 and FY16, a total reduction of $1 billion.
Qantas has also reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to the airport owner at a cash value of $112 million.
Chief Executive Officer Alan Joyce said Qantas would do everything in its control to overcome some of the toughest market conditions it had ever faced.
“It’s clear that the market Qantas operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” Mr Joyce said.
“This situation is reflected in the financial result Qantas announces today, an Underlying PBT1 loss of $252 million for the half-year. This is an unacceptable and unsustainable result. Comprehensive action is needed in response.
“Qantas’ competitors have increased capacity to Australia by 46% since 2009, more than double the world average, at a time of record fuel costs and economic volatility.
“We have met these challenges head on. Over the past four years, we have been carrying out the biggest transformation since Qantas was privatised – cutting comparable unit costs by 19% over four years, introducing new aircraft and technology on a large scale, modernising work practices and revitalising service. But this is not enough for the circumstances we now face.
“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights.
“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported to the ASX on 6 February, it was losing money. That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.
“The Virgin Australia Group has increased capacity into the domestic market at more than twice the rate of the Qantas Group since July 2011. As a result of these combined capacity increases, the total domestic profit pool has been shrunk from more than $700 million in FY12 to less than $100 million in 1H14.
“We have been clear with the Australian Government about the uneven playing field and the measures we believe could address it. But our focus today is on the immediate steps that Qantas must take.”
The airline has said it will take action to permanently reduce costs in all parts of the Qantas Group through to FY17, including fleet and network changes, productivity improvements, consolidation of business activities, new technology and procurement savings.
More than 50 aircraft will be deferred or sold and the group’s workforce will be reduced by 5,000 full-time equivalent positions by FY17.
The Qantas Group’s planned capital expenditure net of operating lease liability will be reduced to $800 million in both FY15 and FY16, a total reduction of $1 billion.
Qantas has also reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to the airport owner at a cash value of $112 million.
Chief Executive Officer Alan Joyce said Qantas would do everything in its control to overcome some of the toughest market conditions it had ever faced.
“It’s clear that the market Qantas operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” Mr Joyce said.
“This situation is reflected in the financial result Qantas announces today, an Underlying PBT1 loss of $252 million for the half-year. This is an unacceptable and unsustainable result. Comprehensive action is needed in response.
“Qantas’ competitors have increased capacity to Australia by 46% since 2009, more than double the world average, at a time of record fuel costs and economic volatility.
“We have met these challenges head on. Over the past four years, we have been carrying out the biggest transformation since Qantas was privatised – cutting comparable unit costs by 19% over four years, introducing new aircraft and technology on a large scale, modernising work practices and revitalising service. But this is not enough for the circumstances we now face.
“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights.
“Late last year, these three foreign-airline shareholders invested more than $300 million in Virgin Australia at a time when, as Virgin Australia reported to the ASX on 6 February, it was losing money. That capital injection has supported continued domestic capacity growth by Virgin Australia despite its growing losses.
“The Virgin Australia Group has increased capacity into the domestic market at more than twice the rate of the Qantas Group since July 2011. As a result of these combined capacity increases, the total domestic profit pool has been shrunk from more than $700 million in FY12 to less than $100 million in 1H14.
“We have been clear with the Australian Government about the uneven playing field and the measures we believe could address it. But our focus today is on the immediate steps that Qantas must take.”
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