Qantas announces domestic capacity cuts and says Jetstar CEO stepping down

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Australian flag carrier Qantas announced on Friday (24 June) that it was cutting domestic capacity to get a better handle on rebounding traffic and said Jetstar CEO Gareth Evans, once seen as a successor to current CEO Alan Joyce was stepping down.

The airline said it was cutting capacity “to assist with the recovery of sustained high fuel prices”. For July and August, an additional 5 percentage points of capacity will be removed on top of the 10 percent announced in May, the airline said. “This total 15 percent cut will also be applied to September. A cut of 10 percentage points will be applied to schedules from October through to the end of March 2023. This brings the group’s planned domestic flying down to 106 percent of pre-COVID levels for the second quarter of FY23 and 110 percent for the third quarter.

“These reductions, combined with robust international and domestic travel demand, are expected to help the group substantially recover the elevated cost of fuel indicated by forward oil prices. They will also assist with the near-term resourcing pressures currently being felt across aviation and the broader economy,” Qantas said in a press release.

“The customer impacts from these schedule changes are expected to be minimal, with capacity being removed mostly from high-frequency routes. Those affected will be contacted directly with alternatives as close as possible to their original timing, usually within one to two hours. Many of these adjustments have already been made with the remainder to flow through in coming days,” the airline said.

There are no changes to the group’s international capacity plans, with flying steadily increasing from around 50 percent of pre-COVID levels currently to around 70 percent by the end of the first quarter of FY23 to help meet demand. This growth will continue as additional A380s are returned to service, with total group international capacity reaching 90 percent of pre-COVID levels by the fourth quarter of FY23.

Meanwhile, Qantas also announced that Jetstar CEO Gareth Evans has made the decision to step down from his current role in December 2022. Evans was once seen as a potential successor to current CEO Joyce and is a 23-year veteran of Qantas. Evans spent time as chief financial officer, CEO of Qantas International and, since 2017, CEO of Jetstar. Evans will remain with the group into next year to work on key projects before leaving during 2023. An internal recruitment process for the Jetstar CEO role is underway, with a handover of several months expected, the airline said.

“Gareth has been a superb leader and member of the senior executive team for many years. He’s given an incredible amount to the organisation in several key roles, from his time as CFO through major restructuring and most recently as Jetstar CEO as we navigated COVID. When he leaves next year it will be with our sincere thanks and best wishes,” Joyce said. “We spend a lot of time developing our internal talent pipelines for succession opportunities like this and we’ll be appointing a new chief executive for Jetstar soon.”

Beefing up staff levels
Qantas also announced it was beefing up its staffing levels to handle the Australian school holiday period and would add 15 percent more staff to its ground handline operations. Since April, Qantas and Jetstar have recruited more than 1,000 operational team members and hundreds of additional contact centre staff. Qantas will have 20 percent more staff on hand to minimise any impact of sick leave, the airline said.

The airline also said up to 19,000 employees across the Qantas Group will be offered a A$5,000 boost as the national carrier shares the benefits of its recovery. The payment will be made to employees once a new enterprise agreement covering them is finalised. Nine agreements covering some 4,000 employees have been finalised already and will be paid shortly. Consistent with previous discretionary payments, eligibility conditions will apply. This follows a two-year wage freeze and comes on top of two percent annual pay increases that are currently being negotiated across the Group. The cost of the recovery boost to the group is estimated at around A$87 million in FY22.

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