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Sat, Jul 19, 2008 - Page 10 News List

Qantas cutting workforce to offset rising fuel costs

AP , SYDNEY

Qantas Airways Ltd announced yesterday it was slashing its workforce by 1,500 people worldwide, the latest in a string of measures to try to offset skyrocketing fuel costs.

Chief executive Geoff Dixon said the cuts — about 1,300 of them coming in Australia — represent 4 percent of its total workforce.

The airline said it would also close call centers in Tucson, Arizona, and London, causing the loss of 99 jobs.

Dixon said the cuts were necessary to ensure that Qantas survives what he called a crisis in the aviation industry caused by large rises in the price of fuel.

“I think it’s as tough as I’ve seen it,” Dixon told reporters. “It’s not just aviation being hurt by oil prices, it’s other things, such as food. It’s tough — there’s no doubt about it.”

Fuel accounts for about 35 percent of Qantas’ expenses and rising fuel costs are expected to add more than A$2 billion (US$2 billion) to the company’s fuel bills this fiscal year.

The airline’s work force of 36,000 people accounts for another 30 percent of costs.

The first step in the job-shedding plan would be to ask for voluntary redundancies, Dixon said.

“But unfortunately, with these numbers we will have compulsory redundancies,” he said, adding that the redundancies would be completed by December.

Australian Transport Minister Anthony Albanese said the government would provide assistance to those who lose their jobs.

“Certainly the government is disappointed with any job losses and we want to make sure that the workers are given every support,” Albanese said.

To reduce costs even more, the firm will maintain an executive pay freeze for the foreseeable future.

The airline is also abandoning plans to increase its capacity by 8 percent in the next 12 months, with no growth whatsoever now expected in that period, Dixon said. Also, 22 older planes in Qantas’ 228-strong fleet would be retired.

Qantas’ budget subsidiary Jetstar would also be hit by the cuts, with its hiring program suspended. A Jetstar cabin crew and pilot base in the southern city of Adelaide will be shut by September.

Qantas has already increased fares twice and cut capacity twice in recent months.

The Australian Services Union (ASU), which represents airport administrative staff, said service standards would fall with the new cuts.

“To cut 20 percent of back office staff undervalues what they do, it’s not as if people are sitting around doing nothing,” said ASU assistant national secretary Linda White.

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