Bloomberg News

Qantas Says Strikes Cost A$68 Million, Cause Bookings ‘Dive’

October 28, 2011

(Updates with comment from chairman in last paragraph.)

Oct. 28 (Bloomberg) -- Qantas Airways Ltd., Australia’s biggest carrier, said union disputes have cost A$68 million ($73 million) so far this year as flight disruptions deter passengers from buying tickets.

The action is cutting sales by A$15 million a week and created “such uncertainty for our customers that we have seen a dive in forward bookings,” Chief Executive Officer Alan Joyce said at the company’s annual shareholder meeting in Sydney today. “If this continues there will be an impact on jobs.”

Unions picketed the meeting, extending a campaign for job- security measures that has forced the carrier to ground seven aircraft and cut flights as Joyce tries to reverse A$200 million in losses from international operations. Qantas plans to create two airlines overseas as Middle Eastern and Asian carriers win over long-haul travelers and second-ranked Virgin Australia targets its 65 percent share of domestic passengers.

“They are trying to shift the best part of our airline to Asia, which is something I think most Australians despise,” Steve Purvinas, head of the engineers union, told reporters outside the meeting. “Severe action may be something that comes up in the future.”

Groups representing long-haul pilots, baggage handlers and cabin crew at budget unit Jetstar were also protesting at the meeting alongside the engineers union. They handed out leaflets and urged shareholders to vote against the company’s board.

The carrier fell 1.6 percent to A$1.545 at the close of Sydney trading, extending its decline this year to 39 percent. The benchmark S&P/ASX 200 Index has dropped 8.3 percent.

‘Volatile’ Conditions

Qantas said it isn’t possible to make a profit forecast for the current half amid “volatile” conditions, higher fuel prices and the ongoing union issues. Earnings at Qantas more than doubled to A$250 million in the year ended June 30.

While floods in Thailand are affecting bookings, it is too early to quantify the impact, Joyce said.

The Transport Workers Union, which represents baggage handlers, also staged a stoppage today. Members of the Australian Licenced Aircraft Engineers Association have called a three-week halt to action to continue talks.

The engineers want to ensure maintenance on new aircraft such as Airbus SAS A380s and Boeing Co. 787s is done in Australia, to help maintain jobs as older planes like 767s are retired. The baggage handlers are seeking to stem the use of contract labor, while long-haul pilots want to be under the same employment conditions whether they fly for the Qantas-branded unit or Jetstar.

Qantas said all shareholder resolutions, including the election of directors, were supported by more than 90 percent of votes cast.

Earlier, investors at the four-hour meeting criticized Joyce’s pay, the company’s failure to pay a dividend since 2009, the decline in its share price and the ongoing labor issues.

“The board is very, very conscious that we haven’t paid a dividend,” Chairman Leigh Clifford told reporters after the meeting. “But we are in a situation where there is a lot of economic uncertainty.”

--Editors: Neil Denslow, Garry Smith

To contact the reporter on this story: Robert Fenner in Melbourne at rfenner@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net


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