SYDNEY: Qantas Airways Ltd., Australia’s largest carrier, will cut 500 jobs and consolidate heavy maintenance in two bases to pare costs as it contends with rising fuel prices and losses on international routes.
The carrier will centralize heavy-maintenance work at Melbourne’s Avalon airport and in Brisbane, it said in a statement today. A third base, at Melbourne’s Tullamarine airport, will be reduced to only doing line maintenance, such as preflight checks, starting in August, it said.
Qantas will save A$70 million or US$69 million to A$100 million a year from the changes, as Chief Executive Officer Alan Joyce tackles maintenance operations costing 30% more than competitors’, according to the carrier. The airline also expects a 60% reduction in heavy-maintenance requirements over seven years as it adds new planes.
“We cannot take advantage of this new generation of aircraft if we continue to do heavy maintenance in the same way we did 10 years ago,” Joyce said in the statement.
Heavy maintenance would eventually be reduced to a single base, probably Brisbane, he told a media conference after the announcement without giving a timetable.
The carrier closed unchanged at A$1.43 in Sydney trading, while the benchmark S&P/ASX 200 index rose 0.7%. Qantas has fallen 32% in the past year, compared with a 12 percent drop in the index.
Unit costs at Sydney-based Qantas’ mainline unit have risen 1.6% over the past 10 years, compared with declines at Emirates and Singapore Airlines Ltd., Russell Shaw, an analyst at Macquarie Group Ltd. in Sydney, said in a May 11 note to clients.(Bloomberg/T03/aph)
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