Bloomberg News

Qantas to Cut 400 Flights, Ground Aircraft on Labor Strikes

October 15, 2011

(Updates with prime minister’s comments in eighth paragraph.)

Oct. 15 (Bloomberg) -- Qantas Airways Ltd., Australia’s biggest carrier, said it will cut almost 400 domestic flights affecting 60,000 passengers for the next month as a result of labor union strikes.

Bans on overtime by engineers caused a backlog of maintenance and forced the grounding of five aircraft from next week, Sydney-based Qantas said today in an e-mailed statement.

While a planned four-hour strike in Adelaide and one-hour stoppages in Melbourne, Sydney, Brisbane and Adelaide have been postponed for two weeks, this “will not help get these five grounded aircraft back up in the air,” said Olivia Wirth , a spokeswoman for Qantas.

Workers from the airline’s engineering, long-haul pilots and ground crew unions have held strikes, used public address systems to criticize Qantas and banned overtime as they seek higher pay and job security clauses in contracts.

Disruptions by the end of this week will have affected more than 60,000 passengers, the company said.

The union action comes amid Chief Executive Officer Alan Joyce’s plans to establish new carriers in Southeast Asia and Japan to tap Chinese travelers as he seeks to turn around A$200 million ($204 million) in annual losses from international operations.

‘Coordinated Attacks’

“The coordinated attacks on Qantas and our passengers from the pilots’ union, the licensed engineers’ union and the Transport Workers’ Union are continuing to impact the business and our passengers,” Wirth said. “The biggest impact on Qantas and our passengers comes from the overtime bans and ‘go slow’ on work, which have caused the backlog of maintenance.”

Australian Prime Minister Julia Gillard said yesterday the government is able to intervene if disputes escalate.

“In our industrial relations system there has been the ability of government to get involved in major disputes which have implications for the national economy, or implications for health and safety,” Gillard said in an interview on ABC radio.

Joyce said Oct. 13 the company isn’t “at war” with its labor unions. He also said that further planes may be taken out of service if disruptions continue. The carrier is achieving an on-time rate of 77 percent compared with 87 percent four weeks ago, Qantas said two days ago.

“The union is still demanding significant pay increases and guarantees that old work practices remain in place,” Wirth said. “Until the union drops its unreasonable demands, we are not going to get any closer to an agreement.”

Qantas shares fell 0.3 percent to close at A$1.56 in Sydney trading yesterday, while the benchmark stock index declined 0.9 percent.

--Editors: Paul Tighe, Jim McDonald

To contact the reporter on this story: Soraya Permatasari in Melbourne at soraya@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net


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