Bloomberg News

Qantas Labor Strikes Damaging Airline’s Future, CEO Joyce Says

October 16, 2011

Oct. 17 (Bloomberg) -- Qantas Airways Ltd. is being damaged by strikes that have forced the grounding of aircraft and the cutting of 400 domestic flights for the next month, Chief Executive Officer Alan Joyce said.

The Sydney-based airline’s engineering, long-haul-pilot and ground crew unions have held work stoppages, used in-flight address systems to criticize Qantas and banned overtime as they seek higher pay and job security clauses in contracts. The Australian and International Pilots Association said yesterday Qantas management has halted talks with the union.

“These three unions are sticking by unrealistic, outdated demands that are going to be damaging to the future of the company,” Joyce said in an interview on Sky News yesterday. “We don’t see this getting better anytime soon. If anything, this is getting worse.”

Qantas, Australia’s biggest carrier, said it will ground five aircraft starting today because bans on overtime by engineers have caused a maintenance backlog. Disruptions will have affected more than 60,000 passengers and more aircraft may be grounded if stoppages continue, Joyce said.

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

‘Secure All Jobs’

“We’re going to make the radical change that’s needed to our international business so we can stop our A$200 million losses, turn that business around, and grow jobs here and secure all 35,000 jobs within Qantas,” Joyce said. “This union action is an attempt to stop us making that change. They would like the work practice to be outdated. If we allow that to happen, Qantas will not be around for the next nine years.”

Calls to the office of Tony Sheldon, national secretary of Transport Workers Union of Australia in Sydney, weren’t answered yesterday.

The pilot association is asking Qantas to rethink its “baffling decision to suspend” talks and return to the negotiating table, it said in the statement yesterday.

“Qantas pilots can’t stand the damage being done to the airline through this bitter dispute, which is why we are eager to come to a negotiated solution,” association President Barry Jackson said. “That’s pretty tough to achieve when one side suspends negotiations.”

Government Can Intervene

Australian Prime Minister Julia Gillard said last week 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 last week.

The government’s attention “shows the impact that Qantas has on the general economy,” Joyce said of Gillard’s comment. The airline has been forced to move some of its aircraft heavy maintenance work offshore as a result of the industrial action, he said.

Qantas shares fell 0.3 percent to close at A$1.56 in Sydney trading on Oct. 14, while the benchmark stock index declined 0.9 percent.

The carrier is achieving an on-time rate of 77 percent compared with 87 percent four weeks ago, Qantas said. Joyce said on Oct. 13 the company isn’t “at war” with its labor unions.

“The union leaders are saying they’re after job security,” said Joyce. “Well, these outrageous demand and claims and a statement that people shouldn’t be traveling with Qantas only damages that job security.”

--Editor: 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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