Australia’s flag carrier, Qantas, will sack 6,000 people and continue to stand down half its 30,000-strong workforce as it struggles to cope with the continuing shutdown of the airline sector amid the coronavirus crisis.
Alan Joyce, the chief executive who has previously claimed the airline was in a much stronger financial position than its stricken rival, Virgin Australia, said the company would also be raising $1.9bn in fresh capital to help see it through until flying resumes in earnest.
He said the stand-down was likely to extend for a long time, with international flights not to resume in earnest before July next year at the soonest. Joyce said he wanted the federal government to extend jobkeeper subsidies, which are due to expire in September, for the airline sector.
“We’re having good discussions with the government about possibly extending jobkeeper, or some other form of support, for those in the aviation industry who will be stood down for an extended period,” he said.
Qantas’s fleet of 12 long-haul Airbus A380s, which can carry more than 800 passengers, will be sent to the Mojave desert for storage for three years.
The airline also cancelled a $200m dividend payment it was due to make to shareholders in September.
The move was immediately condemned by the national secretary of the Transport Workers’ Union, Michael Kaine, who accused Joyce of being “quick to cut jobs and hang workers out to dry” and said the airline should have held off on sackings until after the federal government announced whether the jobkeeper program would be extended.
Kaine said both Qantas and the Morrison government, which has repeatedly rebuffed the TWU’s calls for a bailout of the aviation industry, were to blame for the job losses.
“Before Qantas slashed thousands of workers’ jobs and takes more of its planes down to the pawn shop it should be lobbying the federal government for an extension to jobkeeper and financial support to allow the airline to weather the crisis,” he said.
“The Qantas CEO is very good at walking the halls of Canberra when it suits his agenda, yet he is quick to cut jobs and hang workers out to dry. We are demanding that he halt these redundancies until the federal government makes an announcement on jobkeeper.”
The prime minister, Scott Morrison, said aviation was a sector that would need continued support with jobkeeper wage subsidies and other coronavirus support measures due to end in September.
“We are just working through the best way to target and deliver that support,” he told reporters in Sydney on Thursday.
He said “jobkeeper or other measures” could be used to help the sector in the future.
Despite the job losses and financial carnage, Joyce stood by his controversial “Project Sunrise” plan to start ultra-long-haul flights of up to 21 hours to London and New York.
His sober words on Thursday contrasted with punchy statements in March, when he took aim at Virgin by saying it was “survival of the fittest” in the airline industry and Qantas was “working on is making sure we are last man standing”.
These statements drew the ire of the competition regulator Rod Sims, who said they were “unhelpful” and he would investigate them.
Since then, Qantas has been able to avoid raising capital, which dilutes the value of existing shares, by mortgaging some of its planes.
But on Thursday Joyce said the $1.9bn capital raising, the airline’s first in a decade, was needed to “strengthen our balance sheet and accelerate our recovery”.
The airline’s board backed Joyce on Thursday, extending his tenure to at least 2023, by which time he will have been in the top job for an unusually long 15 years.
The chief executive, who was paid almost $24m last year, has previously agreed not to take pay until the end of this month and said this arrangement would continue into July. A company spokesman said this would continue until the airline was “flying more”.
Senior executives have taken a 15% pay cut and no bonuses have been paid this year. There was no set date for executive pay to return to normal, the spokesman said.
The opposition’s industrial relations spokesman, Tony Burke, accused the government of ignoring the airline sector’s woes.
“Instead of listening, the government has spent the last few months ignoring the structural problems in the industry, hoping on a wing and a prayer that the market would sort it out,” he said.
He blasted the government for denying jobkeeper payments to thousands of workers at airline service company dnata because it was foreign-owned and for allowing Virgin Australia to fall into administration in April.
“Now they are too late to save thousands of jobs at Qantas,” he said.
The sackings and capital raising at Qantas come as Virgin Australia’s administrators move closer to selecting a new owner for the debt-laden airline.
There are two bidders, Bain Capital and Cyrus Capital Partners, but this week bondholders owed more than $2bn complicated the process by lodging a late offer to pour $1bn into the airline and refloat it on the stock exchange.
The administrators, partners at accounting firm Deloitte, hope to have a sale agreement struck by next Tuesday.