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A Qantas plane - Source: ONE News
Qantas says more than 1,500 jobs could go as its reduces capacity in the face of rapidly deteriorating trading conditions.
The Australian carrier said on Tuesday another 500 management positions would be cut and "up to 1,250 equivalent full time positions will be affected in addition to the management reductions being made".
Qantas also slashed its full year pre-tax profit outlook to between $100 million and $200 million, down from its previous forecast of $500 million.
"Qantas today announced that, due to a rapid and significant deterioration of trading conditions in the past few weeks, it is revising its 2008/2009 full year profit before tax outlook downwards from around $500 million to between $100 million and $200 million," Qantas said in a statement.
The carrier said the profit forecast range is subject to no further changes in market conditions, fuel prices, and volatility in hedge accounting results.
In March, Qantas cut 90 senior management positions.
The cut came on top of the 1,500 job cuts announced by the airline in July last year.
CEO Alan Joyce said Qantas's international services and Qantas freight were bearing the brunt of the decline in economic conditions, with a lesser impact on Qantas domestic services.
Joyce said Jetstar, the Qantas Frequent Flyer business and QantasLink were continuing to perform well.
"Market conditions have deteriorated, especially in our international business," he said.
He said Qantas was experiencing significantly lower demand, particularly in premium classes, and considerable price pressures with extensive sales and discounting by all carriers in some cases leading to fare reductions of up to 50%.
Recession response
"We have no choice but to lower our profit forecast and make major changes to ensure Qantas can weather the current commercial environment."
He said responding rapidly to declining economic conditions would "unfortunately" have a direct impact on Qantas staff.
"We employ over 34,000 people and we are striving to protect as many of their jobs as possible, but the capacity reductions to protect the long-term viability of the overall Qantas Group mean that up to 1,250 equivalent full-time positions will be affected in addition to the management reductions being made."
Joyce said Qantas wanted to avoid redundancies wherever possible, so it would try to use a range of workforce initiatives to manage the downturn such as annual leave, long service leave, attrition, redeployment, leave without pay, promoting part-time work and exploring job-sharing.
The airline also said it would reduce capital expenditure by at least $800 million in 2009/10, defer aircraft orders, including four Airbus A380s and twelve Boeing 737-800 aircraft and reduce capacity by a further 5%.
It would ground the equivalent of 10 aircraft and make them available for sale, the carrier said.
Qantas said it was determined to see the group remain strong and profitable over the longer-term in order to protect the interests of its employees and shareholders.
"The structural flexibility of our two-brand strategy, Qantas diversified portfolio of businesses, and prudent financial management have cushioned the impact of the recent deterioration in market conditions.
"Taking further action on costs and capacity will ensure we can continue to benefit from those strategies."
In February, Qantas reported a 66% drop in first half net profit to $210 million compared to the prior first half.
