Qantas to axe 1,000 workers as SARS bites

  • Business
  • Thursday, 10 Apr 2003

SYDNEY: Australia’s biggest airline, Qantas Airways, is laying off 1,000 people, or about 3% of its workforce, as the war in Iraq, the spread of the deadly Severe Acute Respiratory Syndrome (SARS) virus and general weak economic conditions bite into its operations. 

Qantas said yesterday it would also eliminate about 400 permanent positions through attrition and convert a further 300 permanent jobs to part-time positions. 

Shares in Qantas, still one the world’s most profitable airlines, tumbled more than 4% on the news, in line with regional counterparts Singapore Airlines (SIA) and Cathay Pacific as the SARS virus sweeping Asia and the Iraq war hit bookings. 

Airlines around the world have slashed flights and staff as they struggle to cope with a drop in international bookings, with the impact of SARS hurting demand already depressed by the war. 

German airline Lufthansa AG became one of the latest casualties as it warned on Tuesday of an “unexpectedly” deep first-quarter operating loss due to a sharp fall in passenger numbers and introduced short-time working for thousands of workers. 

Qantas said its international forward bookings remained soft, with passengers wanting to fly the “kangaroo route” to London down 10%. Bookings to Hong Kong are down 25%, to Japan down 20% and to Europe down 17%. 

“We’re seeing in the last 10 days that SARS and the amount of publicity it has this region as we said is causing more problems than the war,” chief executive Geoff Dixon told reporters. 

Qantas, which employs 35,000 people, said it would not rule out further job cuts and planned to extend an accelerated leave programme, which had aimed to temporarily cut 3,000 full-time equivalent positions through forced leave and a hiring freeze. 

The equivalent of about 2,500 employees would take accumulated leave between March and June 30, and the equivalent of about 1,000 more would take accumulated leave through September. 

The job cuts would affect 9% of Qantas management and 5% of wage and salaried employees, said the airline, which will take a A$60mil charge. 

However, Qantas stuck with the profit forecasts made at the end of March when it cut international flights by 20% and warned that 2002/03 profit would come in 15% below analysts’ expectations of about A$600mil. – Reuters  

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