QANTAS GROUP STRATEGY UPDATE
• $2 billion cost reduction, including 5,000 jobs
• More than 50 aircraft to be deferred or sold
• $1 billion capital expenditure reduction
• Core investment in customer service to continue
SYDNEY, 27 February 2014: Qantas today announced detail of its $2 billion cost reduction program and capital expenditure review.
Qantas will take action to permanently reduce costs in all parts of the Qantas Group through to FY17, including fleet and network changes, productivity improvements, consolidation of business activities, new technology and procurement savings. More than 50 aircraft will be deferred or sold and the Group’s workforce will be reduced by 5,000 full-time equivalent positions by FY17.
The Qantas Group’s planned capital expenditure net of operating lease liability1 will be reduced to $800 million in both FY15 and FY16, a total reduction of $1 billion.
Qantas has reached agreement on the return of its Brisbane Airport terminal lease, together with related assets, to the airport owner at a cash value of $112 million. The broader structural review of the Qantas Group portfolio continues and no final decisions have been made on other assets.
Chief Executive Officer Alan Joyce said Qantas would do everything in its control to overcome some of the toughest market conditions it had ever faced.
“It’s clear that the market Qantas operates in has changed, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy,” Mr Joyce said.
“This situation is reflected in the financial result Qantas announces today, an Underlying PBT1 loss of $252 million for the half-year. This is an unacceptable and unsustainable result. Comprehensive action is needed in response.
“Qantas’ competitors have increased capacity to Australia by 46 per cent since 2009, more than double the world average, at a time of record fuel costs and economic volatility.
“We have met these challenges head on. Over the past four years, we have been carrying out the biggest transformation since Qantas was privatised – cutting comparable unit costs1 by 19 per cent over four years, introducing new aircraft and technology on a large scale, modernising work practices and revitalising service. But this is not enough for the circumstances we now face.