Qantas – Incoming Turbulance

Australia’s only Flying Kangaroo

 

 

 

5000.

That’s the number of full time equivalent (FTEs) employees the airline plans to axe by FY2017; with 4000 of these redundancies expected to be completed by the end of FY2015.  News of the job cuts have made headlines across Australia, with union talks now underway, and parliament debating on whether Australian tax payers should offer a crutch to the struggling airline.

Investors were not please either, with the company posting a quarterly loss of $235m, driving the company’s shares down nearly 9%, opening at $1.277 on Wednesday, and closing today at $1.165.

Its obvious from the company’s balance sheet that business is not exactly booming.

Intense competition from Virgin, and low-budget airlines such as Tiger have eaten away at Qantas’s dominance in the market, and increasing fuel cost are further adding to the pain.

At this stage, a government handout seems unlikely; SPC, Ford, Toyota, and Holden all failed to do so, and there is no indication the government will budge for the Australian Airline.

Personally, I do not believe a government handout will save jobs in the long term.  The simple fact of the matter is that there is not enough business to sustain the number of employees and the fleet that the company currently holds.  No amount of union talks can change that.  At best, all we can hope from the unions are more favorable redundancies packages.  At worst, an employee strike, which will only further exacerbate financial problems.

Whatever eventuates, the hard fact is some jobs will be lost; almost nothing will change that.

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