@QantasAirways Joyce warns MPs of accelerated cost cutting

[markis10]

In a closed-door briefing to a large group of Coalition MPs and senators in Canberra, Mr Joyce foreshadowed the magnitude of the extra costs he plans to strip out by emphasising that they will be proportionately greater than those made to American Airlines when it was placed in bankruptcy protection.
He told the group, which included Social Services Minister Kevin Andrews, that national airlines ''cannot stand still'', and Qantas would be shifting to a new, accelerated phase of cost cutting.
Mr Joyce will meet Treasurer Joe Hockey and Transport Minister Warren Truss on Thursday in a bid to encourage the government to offer Qantas a debt guarantee. While his pleas have met resistance by senior ministers such as Mr Truss, the Treasurer has been open to making a special case for Qantas.


Read more: Few Qantas cuts to be popular, Joyce tells Coalition MPs

 

[cmon0005]

He may accelerate cost cutting, at the same time if customer experience is impacted any further then customer's may 'accelerate' their moving to competitors flights.

 

[smit0847]

What cuts are they expecting to make? Apart from all the dead wood employees I'm not sure how they can cut corners without significantly impacting the customer experience?

 

[cmon0005]

What cuts are they expecting to make? Apart from all the dead wood employees I'm not sure how they can cut corners without significantly impacting the customer experience?

Maybe instead of a cafe breakfast it'll be changed to BYO breakfast.

 

[JessicaTam]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

Maybe instead of a cafe breakfast it'll be changed to BYO breakfast.

BYO plane?

 

[cmon0005]

BYO plane?

Also when flying F you'll have to BYO Champagne! Shock!!!

 

[JessicaTam]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

Also when flying F you'll have to BYO Champagne! Shock!!!

Well they have been known to run out. :shock:

 

[eastwest101]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

We await to see the location and magnitude of the cuts that Alan Joyce is proposing. If they are going to be proportionally more that AA, then without a Ch 11 Bankruptcy Law and if large scale redundancies are being considered - it difficult to see how this can happen without response from the unions and the resultant strike actions. He cannot be talking about "taking the olive out of the salad" or "cafe style breakfast" enhancements - the problem is much bigger than that.

I do agree that QF has a good point about adjusting or removal of the QF Sales act but that is unlikely to get through this senate, or even the next senate. The Government Debt Garantee is more controversial and even if succesful would only be a partial solution to cheaper capital raising, albeit with another distortion in the market now that VA would be bankrolled by EY NZ and SQ investors and QF by the australian taxpayer.

Accelerated fleet retirement and route cutting is the easy, obvious and wrong answer to QF's problems. Just ask Ford Holden and Toyota how cutting back production and capacity worked out for them. It just throws away your economy of scale and is the inevitable route to becoming uncompetative, irrelevant and then absent in the market. They really have stop and think about utilizing their existing fleet much in a much smarter way. Having A380s parked and LHR and LAX for half their lives in not an efficient use of capital, the fleet utilization and fleet planning at QF has been amateur hour for the last decade but at least they can make the most of what they have got.

Short of removing a lot of the fixed legacy costs and/or relocating the entire workforce overseas or into a different industrial relations system I can't see how QF management can do it myself, or at least without crippling strikes and a festival of Industrial law cases. Its interesting to note that Ch 11 bankruptcy and getting the US government to bail out and pay for the legacy pension costs was a few of the ways that AA went. I can't see the current Australian government bailing out the entire pension and legacy costs on QFs behalf.

 

[dk4]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

I like this AA analogy!

Their first change, when AA went into chapter 11 protection, was the CEO - Gerard Arpey went and in came Thomas Horton.

So, we now know what the first move at Qantas should be!

 

[yohy?!]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

this smells like softening up for more broken promises along the lines of "no QF routes going to Jetstar".

think we can expect to some of the thinner routes in QFi being axed or gifted to JQ - they have to do something with their new 787s and parked A320s!

 

[smit0847]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

I also can't wait to see how they're going to make a profit on their A330 J refurb - the new seats take up more space meaning 1/3 less J seats in the same cabin. Without increasing prices by 1/3rd they will make no more money than they make now. They're already amongst the most expensive carriers - can't imagine pax being willing to pay even more while they attempt to compete with SQ and CX!

 

[eastwest101]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

Could be some truth in there with other posters suggesting Manilla, Jakarta and Noumea all being eliminated from the QFi network, could also be Honolulu, Shanghai, Tokyo and a number of (all of?) NZ destinations added to list of these ports being completely Jetstarized.

I don't think this will be anywhere enough to save QFi but as you say - those extra B787s and A320s have got to go somewhere......

 

[Alanslegal]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

I can't see the current Australian government bailing out the entire pension and legacy costs on QFs behalf.

And then blame the workers that is becuase of their $100K salaries that caused the crash. Actually you can pay workers half of that and QF will still be uncompetitive from a workforce POV because an equivalent S.E asian based employee will be paid a 1/3rd of $50K and be happy.

I agree that QFi will be reduced even further and those international routes will be picked up by JQi.

 

[MEL_Traveller]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

i see perhaps the creation of a new class of service on board domestic flights... full fare Y gets food and beverage, those on lower fares (red E deals) get nothing (maybe a soft drink or water). Might also be going to reduce regional routes?

 

[cambriamarsh]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

i see perhaps the creation of a new class of service on board domestic flights... full fare Y gets food and beverage, those on lower fares (red E deals) get nothing (maybe a soft drink or water). Might also be going to reduce regional routes?

They won't reduce profitable regional routes. That's probably where they make most of their money.

 

[JohnPhelan]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

They won't reduce profitable regional routes. That's probably where they make most of their money.

Can't see much happening with domestic at all - that makes money (though there may be some domestic routes that don't - perhaps they will go). But certainly, what will go are those international routes on which QF loses money. I don't know exactly which routes those are, but I will guarantee they won't cut anything that is making a profit!

 

[jgm]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

The 1st thing they should cut is the bloated executives' salary. I note that the salary CEO of the world's biggest airline (AA) is US$700k. Given the size of QF in relation to AA, that should make Joyce worth around A$250k.

 

[Aussie_flyer]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

It'll be very sad to see Qantas no longer serving every continent. No longer a global carrier. Let's see.

 

[samh004]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

As someone with a family union background, even I can see they wield too much power to the point they're not looking out for their members in the long term, because the outcome with salaries as high as I've seen quoted (and I'm not talking executive) is no income and no pension and Ansett. It's a shame there's no 'chapter 11' protection equivalent here, as they really need a restructure. At the same time someone with some power needs to step up publicly and tell Qantas to give up on the line in the sand, as that'll fix some domestic issues (which I thought was doing fine anyway).

How to fix international besides above? As someone else said, better fleet utilisation. CX does well between Canada and the US, so perhaps an A380 to LAX can continue on to somewhere in Canada? But I'm no expert, I just know they're losing money there, so other than wages they should probably focus their attention there.

On a different note, either the QSA goes or Virgin gets one too and their "shareholders" back off. They can't continue to have money pumped into them while they do as badly as they're doing either. Level the playing field.

 

[amaroo]

Re: Qantas Airways Joyce warns MPs of accelerated cost cutting

Interesting to see how it all plays out. The appetite for an IR battle seems pretty intense.

The IR field has/is being sowed with SPC, Toyota, penalty rates, MUA and so on..... By pure cough - Joyce may end up being in the right spot at the right time.