Qantas remains under pressure, with the airline expected to post a loss of $825 million, with the second-half loss expected to be more than double the $252m in the first half due to the restructuring, according to The Australian.
As a result, Qantas has embarked on a $2 billion cost-cutting effort, announcing that it would retire older aircraft, including its Boeing 767 fleet, which is being reduced from 20 to 12. It has also announced further job cuts, with a further 167 jobs to be cut from the company’s engineering divisions in Sydney and Melbourne, which are part of the 5000 jobs losses announced in February. Already, Qantas has reportedly shed 2,200 by the end of June, with a further 1,800 jobs to go this financial year.
Meanwhile, debate rages over the repeal of the Qantas Sales Act to allow greater foreign ownership, and enable the airline to raise much needed capital to compete with its government-backed rivals. The above segment from ABC’s The Business, aired last night, provides a useful update on the issue and suggests that the Senate may still block the Sale Act’s repeal, with Labor, The Greens and Palmer United Party likely to block the Bill.
My personal view is that there is no good reason to mandate that Qantas remain majority Australian owned. Nor is there justification for providing taxpayer assistance to Qantas, as advocated by Labor.
If Australian icons like Rio and BHP are allowed to be majority foreign owned, why shouldn’t Qantas? It is a private company after all.
Even if Qantas were to fold completely, say through a lack of government backing, airline services would soon be performed by another carrier – be it an expanded Virgin, Tiger or another entrant, such as Singapore Airlines. Either way, the new supplier would still need to employ Australian workers to fulfill its functions – from counter staff, to baggage handlers and airline stewards – and the overall employment impacts from Qantas’ failure would be manageable.
Indeed, when Ansett collapsed a decade or so ago, there was minimal impact on overall aviation employment. Ansett’s void was soon filled by Qantas and Virgin, along with some smaller airlines that have popped-up along the way.
The first best policy response is to remove regulatory impediments that prevent Qantas from competing, not throwing taxpayer support behind the company.
