Qantas has slashed its full-year pre-tax profit forecast by 80% and announced it will cut 1750 jobs, while the country’s biggest travel agency Flight Centre also says it will cut staff.
Qantas chief executive Alan Joyce has said that worsening economic conditions will mean cuts of 1750 full-time positions, including about 500 workers in management roles.
“Unfortunately, responding rapidly to declining economic conditions is going to have a direct impact on our staff,” he said.
“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 1250 equivalent full-time positions will be affected in addition to the management reductions being made.”
Joyce has said that deteriorating market conditions have eaten into sales, especially international business.
“We are 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%”.
Qantas last year recorded a 66% decline in net profit to $210 million in its half-year results last month, and forecast a pre-tax profit of $500 million, down from $618 million in the previous corresponding period.
Now profit is expected to be just $100 million to $200 million.
Joyce says the company will also sell about 10 aircraft, and will reduce flying capacity by up to 50%.
Meanwhile, travel agency Flight Centre has announced that it will continue to make staff cuts as it attempts to survive the downturn, but managing director Graham Turner has said that recovery is in sight.
The company last week said it expects to record a net profit of between $36 million and $44 million for the year ending 30 June, down from last year’s $143.15 million.
Turner told Sky News on Sunday that while the company has cut 100 Australian jobs and about 1000 globally, more redundancies will have to be made.
”We certainly will be losing more people just through attrition – people who resign we won’t be replacing – and we’ve been doing that for the last six to eight months,” he said.
”We certainly are not going to slash and burn, we don’t want to damage our business model. We just want to make sure that our costs can come in line with our slightly decreased income.”
But Turner has said that the next financial year will produce better results for the company as economic conditions continue to improve. ”We certainly are pretty hopeful that we will get that much closer to a breakeven next year.
”We don’t expect boom times in the short term, but we believe underlying profit is pretty good, and (we are) quite confident over the next financial year we won’t see such a bad year. Certainly nothing like this year.”
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
