The CEO of Qantas has announced plans to make 1,000 redundancies, while investing $400 million in upgrades to aircraft and lounges.
The airline has also deferred the delivery of six of its A380s by up to six years, but ordered 110 new aircraft from the smaller A320 family, including 78 next-generation A320 neos.
Alan Joyce said the airline is a “steadily fading business, suffering big financial losses” and faces “serious structural challenges”.
He blamed an “influx” of competition, a high cost base and “progressive deregulation” of the Australian market for Qantas’ “substantial decline” in market share.
Australia has seen some of the fastest capacity growth of any market in the world, according to Joyce, and the majority of passengers are choosing to fly with Qantas’ competitors.
“Foremost among them are Middle Eastern and Asian carriers with well-positioned hubs,” he said, adding that Qantas’ cost base is 20% higher than its key competitors.
“Today a large number of our routes are, primarily to Asia and Europe, are loss-making, with no improvement in sight,” said Joyce.
“Our share of the Asian international market has collapsed to 14%. Our profitable international are not sufficient to make up the shortfall.”
In a bid to turn the airline around, Joyce has outlined a five-year plan to return the airline to profitability, which includes redundancies for staff in management and engineering positions as well as pilots and cabin crew.
This includes expanding its network of destinations through closer relationships with fellow members of the Oneworld alliance such as British Airways and Malaysia Airlines.
Qantas will also invest $400 million in product and lounge upgrades. This will include the refitting of nine B747s with A380 seats and interiors, and new first class lounges in Los Angeles, Singapore and Hong Kong.