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Qantas cuts 1,400 workers, blames SARS cancellations

Qantas Airways Ltd, Australia's largest airline, will cut 1,400 jobs, or 4 percent of its workers, after a deadly virus and war in Iraq caused bookings to drop by as much as a quarter on some international routes.

Another 300 full-time workers will be moved to part-time jobs, and more people will be forced to take leave to cut costs, Qantas said in a statement to the Australian Stock Exchange. The company's stock fell 4.1 percent.

Qantas, which was on track for record earnings this year, is now slashing costs to cope with a slump in travel because of the war in Iraq and a respiratory disease that has killed 103 people worldwide and emptied planes. More jobs may be cut, Chief Executive Geoff Dixon said.

"Only companies that watch their costs fiercely in a volatile market are going to be survivors," said Hans Kunnen, who helps manage the equivalent of US$24 billion at Colonial First State Investments, the largest fund manager in Australia. Qantas "management is making sure the company doesn't fall over."

Qantas shares fell A$0.13 to A$3.07 at the market close in Sydney. Qantas, which said the job cuts will cost about A$60 million (US$36 million) didn't revise its profit forecast, which it said two weeks ago will miss analysts' estimates by 15 percent.

Qantas has shifted planes to domestic routes, and in an effort to fill seats is selling tickets for about a third of the full-fare price. One-way tickets between Sydney and Melbourne are selling for as little as A$89 (US$54), on the company's Web site. A full-fare return ticket costs A$682.

"The global aviation industry is under severe strain," Dixon said in a statement. "We cannot rule out further restructuring, including redundancies."

Dixon told reporters at a news conference that the outbreak of severe acute respiratory syndrome (SARS) was unexpected. "SARS has compounded the situation" and has changed on a daily basis, he said.

"We cannot make judgments on the SARS issue, no more than the World Health Organization can," Dixon said. "All we can do is react to the damage it is causing to the industry."

The Australian Manufacturing Workers' Union, which represents Qantas maintenance workers, said the cuts weren't justified.

"If management sacks just one maintenance worker, they're taking advantage of the current downturn for their long-term benefit," national secretary Doug Cameron said. "Once these jobs are gone, it's very hard to see them coming back even when the industry picks up."
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