Perth Qantas flight cuts ‘extraordinary’

Qantas has announced a $252m half yearly profit loss and confirmed it will cut 5,000 full time jobs.

Record loss ... Qantas Chief Executive Alan Joyce announces it will cut 5000 jobs in a bid to dramatically cut costs following a $252 million first half loss. (Photo by Lisa Maree Williams/Getty Images) Source: Getty Images

AUSTRALIAN travellers can kiss goodbye to record low airfares as Qantas' move to cut staff and reduce services should spell the end for the country's domestic price war, analysts say.

In what has been the biggest shake-up in the airline's history, the Flying Kangaroo announced yesterday it would cut 5,000 staff, slash routes and cut or defer the arrival of 50 aircraft into its fleet as it seeks to make $2 billion in savings.

FOLLOW TODAY'S EVENTS ON QANTAS' DECISION TO AXE 5000 WORKERS

Australian Business Traveller editor David Flynn said the crisis gripping Qantas should force a major rethink of its business strategy, including a decision to step back from continuing to drive prices down.

"I don't think Qantas could afford to suddenly jump prices up again because they're still in a dogfight with Virgin Australia," he said. "However, I don't expect — especially in the premium market where they are currently fighting hard with Virgin Australia — to see prices continue to go down."

Announcing a $252 million half-year loss, Qantas chief executive Alan Joyce outlined plans to retire its 15 remaining Boeing 767s and six Boeing 747s, along with the deferment of deliveries for eight remaining Airbus A380s and other aircraft.

PM Tony Abbott tells the parliament his concern about an emergency debt guarantee to help Qantas, saying that help for one company would have to be offered to all.

He also announced the airline would exit underperforming routes and change the aircraft it operates on others.

This includes operating Sydney-Singapore and Brisbane-Singapore flights with newer Airbus A330-300 aircraft rather than the existing Boeing 747s, and cutting Perth-Singapore flights altogether from May, which Qantas said have been "underperforming for quite some time."

It will also reduce the number of wide-body aircraft in its domestic fleet, with the remaining aircraft focused on East-West routes and peak Sydney-Melbourne-Brisbane services.

Analysts say these changes are likely to be just the first round of major route cuts and changes, with Qantas flights to Johannesburg, New York and Tokyo to remain under the microscope.

Pacific Aviation Consulting managing director Oliver Lamb said the decision to cut Perth flights was, in particular, extraordinary.

It will mean that Qantas operates no international services from outside the eastern seaboard and sees the airline step away from the country's fastest growing city.

"It's the fastest growing city, its economy is very strong, but Qantas doesn't offer any international services," Mr Lamb said.

"You'd have to go back a long way to find when they last didn't offer any flights from Perth."

Shocked as Qantas announce job losses across Australia ... Flight attendants leave Qantas' Melbourne terminal. Picture Ian Currie. Source: News Corp Australia

WA Tourism Minister Liza Harvey said the end of regular international flights by Qantas from Perth came without warning and is a blow to the State's tourism.

She admitted she had not been told by the company of the intention to dump the route.

``Was I informed prior to this morning's announcement? No I wasn't, but I have been briefed today,'' she told Parliament.

Ms Harvey said the news was a blow to WA's ambition to raise the worth of the state's tourism industry to $12 billion by 2020.

And it also dented a deal announced last September, where the state government signed a $7.65 million marketing deal with Qantas involving advertising in tourism markets such as Singapore.

Ms Harvey denied the airline's move undermined that deal.

``We have a broad strategy with respect to our co-operative marketing arrangements with a range of airlines,'' she said.

Qantas said WA remained an important market, with a possibility of seasonal services on international routes on demand.

``Our new seasonal Perth-Auckland service added almost 8,000 seats over the busy Christmas and summer holiday period to what was a monopoly route,'' the company said in a statement.

``This was very popular with our customers and this is the kind of opportunity we'll look to do more of in future.''

Qantas said they will also operate a number of supplementary services to cater for customers travelling over the peak holiday season in July.

In another development that may affect travellers, the Transport Workers Union also yesterday threatened strike action if the Federal Government does not meet with Qantas to find ways to avoid job cuts

"But if (Treasurer) Joe Hockey's not prepared to do that, then it's industrial action that the workforce should be considering," national secretary Tony Sheldon said.

"In this country, if the government won't stand up for jobs and for the Australian icon, then we will."

Since taking the helm at Qantas in November 2008, the airline has posted its first ever loss, slashed thousands of jobs, frozen workers pay, grounded its entire fleet and almost gone belly up. So is it bad luck or bad management? We give you Mr Joyce. so you can judge for yourself...

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