SYDNEY (Reuters) - Qantas Airways Ltd QAN.AX announced plans to cut up to 2,500 more jobs by outsourcing its Australian ground handling operations to lower costs as it braces for a A$10 billion ($7.17 billion) revenue hit due to the pandemic this financial year.
The job cuts flagged on Tuesday are on top of 6,000 across its workforce announced in June, which would take the total job losses to nearly 30% of its pre-pandemic staffing.
Qantas’ head of domestic operations Andrew David said outsourcing ground handling jobs at the country’s biggest airports would save an estimated A$100 million each year in operating costs.
“It would match our ground handling services with fluctuating levels of demand,” David told reporters at a briefing. “We know an external party can turn our aircraft at 40% lower cost than we can using our resources.”
It would also allow the airline to avoid investing A$100 million in equipment like tugs and bag loaders over the next five years by outsourcing the work to a specialist ground handler, Gareth Evans, Chief Executive of Jetstar, Qantas’ budget arm, said.
The executives did not name the firms that could be involved in the outsourcing, but major ground handlers in Australia include dnata, Swissport and Menzies Aviation.
Qantas shares were up 1.7% on Tuesday afternoon, compared with a 0.2% rise in the broader market .AXJO.
As part of a union agreement, Qantas said it would also have to offer the opportunity for the 2,000 ground handlers at its main brand to bid for the work, though it will not have to do so at Jetstar.
The airline said it would complete its review over the next few months. Most of its ground handling employees have been stood down from work for months and are receiving government aid due to the decline in travel demand.
Transport Workers’ Union National Secretary Michael Kaine, whose union represents the ground handlers, said in a statement the announcement of job losses was “utterly devastating”.
Reporting by Jamie Freed; Editing by Christian Schmollinger and Muralikumar Anantharaman
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