Qantas has rejected calls for its chief executive, Alan Joyce, to resign after the airline announced plans to cut almost 2,500 ground staff jobs in a move labelled “economic violence” and “an evil act of corporate bastardry”.
The airline on Tuesday said it planned to hire an external company to provide services including baggage handling and plane cleaning at 10 large Australian airports.
Its move comes just two months after it announced a “three-year plan to accelerate its recovery from the Covid crisis and create a stronger platform for future profitability” that included axing about 6,000 of its 29,000 workers.
Together, the two rounds of axings are set to result in the company shedding about 30% of its workforce.
Qantas last week blamed a loss for the year of $2bn on the coronavirus crisis.
But Joyce maintained his aggressive attitude towards rival Virgin Australia, which is in administration, declaring last week that after the crisis ended Qantas would be “the only Australian airline that can fly long haul”.
Tuesday’s move was immediately condemned by the union that covers ground staff at Qantas, the Transport Workers Union.
Its national secretary, Michael Kaine, called on Joyce to resign, saying the airline boss had committed “economic violence” against workers and claiming Qantas had squandered more than $500m in government support.
“Qantas has taken millions in jobkeeper wage subsidies, more than any other company, with the express intent of keeping people employed,” Kaine said.
“But now Alan Joyce wants to destroy thousands more livelihoods. This is callous abuse of public money.”
He called on the prime minister, Scott Morrison, to step in and take an equity stake in Qantas, which he said was floundering in a crisis that has gripped the entire aviation sector.
“Scott Morrison, stop kow-towing to this corporate dictatorship,” he said.
The Labor senator Tony Sheldon, who formerly occupied Kaine’s position, said the new job cuts were “an evil act of corporate bastardry from some of the highest paid executives in the world”.
“They are cruelly axing the jobs of 2,400 people who stuck by them when times were tough only to find they are expendable,” he said.
The chief executive of Qantas’s domestic division, Andrew David, said calls for Joyce to resign were “not worthy of a response”.
Qantas said it received $515m from the government, of which $267m was jobkeeper payments to keep people employed. The remainder was a subsidy to run flights including a skeleton domestic schedule and repatriation flights.
The airline said that its net benefit from the government subsidies was just $15m.
“We’re very grateful for it [jobkeeper] here at Qantas,” David said.
“We’re not looking to extend people’s tenure in the organisation artificially so they can receive jobkeeper and then make them redundant at that point in time.
“It’s certainly not fair to the Australian taxpayer to do that.
“This is a terrible situation, these are very hard decisions to make.”
Joyce has previously lashed premiers for closing borders to protect their states from the spread of coronavirus.
David said that border closures, along with the lack of a vaccine and the certainty of a “deep recession”, were among the reasons why Qantas had decided to make a second series of job cuts.
But Gareth Evans, the head of Qantas’s budget division, Jetstar, said it would have made no difference if premiers had agreed to open their borders at a national cabinet meeting last week.
“We’ve seen examples where borders have opened and then closed again,” he said.
“The uncertainty that is wrought by the way that this disease is playing out is having a huge impact on the business and we just don’t know how long this is going to last.”
The cuts will hit Qantas and Jetstar staff at airports in Sydney, Melbourne, Brisbane, Perth, Adelaide, Darwin, Cairns, Townsville, Alice Springs and Canberra.
Qantas said it already outsources ground services at 55 other airports.
The company estimated the cuts would save the company $100m a year in wages and equipment maintenance costs.
In a letter to staff, obtained by Guardian Australia, it also said the cuts meant it would not have to spend $80m on a planned equipment upgrade.
“Due to the significant financial impact Covid has had on our business we no longer have access to the cash to invest in modernising this equipment,” Qantas said in the letter.
Under an enterprise agreement with the TWU, ground staff at Qantas will be able to make a counter-bid to keep their jobs.
However, they face an uphill battle as Qantas estimates it can save as much as 40% by outsourcing the work to an external company.
Employees are to submit their bid by 16 October, according to a schedule distributed to workers by the company.
Jetstar workers have no such agreement and do not have the ability to submit a bid of their own.
Meanwhile, Virgin Australia’s administrators have told unsecured creditors of the airline, including bondholders owed about $2bn, that they stand to receive as little as 8.4c in the dollar.
But they will receive less – or nothing at all – if they attempt to knock back an offer to buy the airline put forward by US private equity group Bain, administrators from Deloitte said in a report to creditors circulated on Tuesday.
The report came ahead of a meeting of creditors set for 4 September at which they are to vote on the Bain proposal.
But creditors, who also include aircraft financiers, suppliers and staff, have little chance of stopping Bain taking control of Virgin because the administrators have the power to sell the assets of the company without approval.
Employees are to get everything they are owed under the Bain deal, at a cost of about $448m.
Bain has also agreed to take on responsibility for about $600m in travel credits and booked flights that haven’t been taken yet.
Key suppliers to the airline fare a little better than bondholders – they are to receive around 14c in the dollar.
But the most bondholders can hope for is 12.8c in the dollar, according to modelling conducted by Deloitte.
A group of bondholders had hoped to put an alternative proposal to the meeting, but this now appears unlikely to happen.
“We have set out our opinion to creditors that it is in their interest to approve the deed of company arrangement proposed by Bain Capital as it provides for the best return to creditors in what are extraordinary circumstances, and that were impossible to foresee,” the lead administrator, Vaughan Strawbridge, said.
“This will provide certainty for the business under new and committed owners. It provides certainty for employees and customers, a return to creditors, and it can be completed sooner, and at less cost than other alternatives.”
“It achieves all the objectives of the voluntary administration process that we sought from the outset. Now we just need to bring the airline out of administration as soon as possible.”
Virgin Australia’s board of directors put the group into administration in April after the company’s repeated requests for a government bailout were refused.
Source: The Guardian