Qantas Grounds its Domestic and International Operations

In an unexpected and completely unprecedented move, Qantas CEO Alan Joyce has shut down all of Qantas’ airline operations until ongoing industrial disputes with its staff are resolved.

As of 8pm on Monday night, the airline will “lock out” all staff involved in its industrial dispute (those that are managed by contracts ruled by the ALAEA, TWU or AIPA).

“We are locking out until the unions withdraw their extreme claim and reach agreement with us,” Mr Joyce told a press conference today at 5pm.

The action is supported by Fair Work Australia and was made known to the Australian Government prior to the announcement.

At the time of the announcement, it is estimated that 12 aircraft at various gates around the world had the be disembarked. The action will affect over 13,000 passengers over the next 24 hours with a cost exceeding 20 million dollars per day.

In a press release issued this afternoon, Qantas states that “[t]his step is being taken under the provisions of the Fair Work Act in response to industrial action taken by these unions. The financial impact of action taken to date has reached $68 million and the action is costing Qantas approximately $15 million per week in lost revenue. Approximately 70,000 passengers have been affected and more than 600 flights cancelled.”

Although we can’t bring you video of the press release just yet, a transcript of the press conference is reproduced below.

Follow us for more information.

Statement by Alan Joyce, 5pm 29th October 2011

A crisis is unfolding within Qantas.

Industrial action directed by the leadership of three unions – the Australian Licenced Aircraft Engineers Association (ALAEA) representing the licensed engineers, the Transport Workers Union (TWU) representing ramp, baggage and catering staff, and the Australian and International Pilots Association (AIPA) representing the long-haul pilots – is aimed at applying so much pressure on Qantas, so much pressure on our customers, and so much pressure on Australian business, that we will give in to their demands.

In 15 months Qantas has reached agreement with more than 10,000 employees represented by four unions on five Enterprise Agreements – or one-third of the Qantas workforce.

Over the same period we have been doing all we can to reach agreement with the ALAEA and AIPA and more recently with the TWU. What makes these union negotiations different? Two things.

First, these three unions are sticking by impossible claims that are not just to do with pay, but also to do with unions trying to dictate how we run our business.

The pilots’ union wants to force us to pay Jetstar pilots on codeshare flights the same high rates that they get at Qantas.

This would set a wages precedent that would soon put an end to Jetstar and slash low-cost travel in Australia.

Our only alternative would be to remove Qantas codesharing from Jetstar which would have the effect of making some key Qantas routes uneconomic.

The licensed engineers want to bind Qantas maintenance to the past; to thumb their nose at world’s best-practice regulations, including those endorsed by Australia’s Civil Aviation Safety Authority; and continue with outdated work practices on new generation aircraft.

The TWU was offered an exceptional deal but is sticking to its completely unrealistic claim that would prevent us from the sensible use of contractors.

These are impossible demands.

We cannot agree to them because they could ultimately put the Qantas Group at risk.

The second thing that makes these unions different is that they are running utterly destructive industrial campaigns against Qantas and our customers, hurting all our employees and undermining Australian business.

The situation is unsustainable.

  • 70,000 affected passengers
  • Over 600 flights cancelled
  • 7 grounded aircraft
  • Nearly $70 million in damage
  • And $15 million in damage for every week that goes by.

The unions’ industrial campaigns are designed to scare away customers.

It has become impossible for Qantas to serve our third-party maintenance clients.

They are trashing our strategy and our brand.

They are deliberately destabilising the company.

And there is no end in sight.

Yesterday two unions declared their intention to escalate industrial action further and over an extended period.

As one said earlier they want: “to bake Qantas slowly”.

The pilots’ union has also said they are considering escalating their industrial campaign.

They talk about job security, but the unions are on a path that would diminish the job security of their own members.

Customers are now fleeing from us.

Key high value domestic bookings on east coast routes are down by 25% on the same period last year.

That’s the most lucrative part of our flying business and it is bleeding badly.

International bookings have also fallen, with November bookings nearly 10% down on where we expected them to be – when Qantas International is already making significant losses.

Our customer research shows an alarming increase in people who intend NOT to fly with Qantas.

In our domestic business that number has surged from a normal 5% to 20%.

The intention not to fly with Qantas internationally has surged to nearly 30%.

Virgin Australia is the main beneficiary of this campaign and has announced capacity increases.

The great irony is that it pays less, is less unionised and does its heavy maintenance offshore.

Yet there is no union pressure on Virgin.

This is a crisis for Qantas.

If this action continues as the unions have promised, we will have no choice but to close down Qantas part by part.

It goes without saying that this would have very grave consequences for jobs.

Killing Qantas slowly would be a tragedy for Qantas and our employees.

But it would also have a terrible domino effect right across Australia, affecting businesses large and small, tourism, freight and families.

We have got to achieve a resolution to this crisis.

We have got to bring this to an end.

So I have no option but to force the issue.

I have to activate the one form of protected industrial action that is available to me to bring home to the unions the seriousness of their actions, and to get them to forge sensible deals with us.

I am using the only effective avenue at my disposal to bring about peace and certainty.

In response to the unions’ industrial action, I announce that under the provisions of the Fair Work Act Qantas will lock out all those employees who will be covered by the agreements currently being negotiated with the ALAEA, the TWU and AIPA. I have informed the Government of this.

The only exception to this is that no employee working overseas will be locked out and all staff overseas will continue to be paid.

The lock-out will commence from 8pm on Monday night Sydney local time and will continue until further notice.

Because the pilots, ramp, baggage and catering staff and licensed engineers are essential to the running of the airline, the lock-out makes it necessary for us to ground the fleet.

However, I cannot wait until Monday to do so.

This is a very tense environment.

Individual reactions to this lock-out decision may be unpredictable.

We are always conservative in our approach.

For this reason, as a precautionary measure, we have decided to ground the Qantas international and domestic fleet immediately.

I repeat, we are grounding the Qantas fleet now.

Obviously, those flights that are currently in the air will complete their scheduled sectors.

However as from now there will be no further Qantas domestic or international departures anywhere in the world.

Jetstar and QantasLink will continue to operate.

Express Freighters Australia and Atlas Freighters will continue flying.

JetConnect will also continue to operate Qantas services across the Tasman.

We are locking out until the unions withdraw their extreme claims and reach an agreement with us.

The great majority of our staff have played no part in this damaging industrial campaign.

On the contrary they have stepped up magnificently to try and minimise the union-inflicted damage.

Until the lock-out commences at 8pm on Monday, all employees are required at work and will be paid.

Once the lock-out commences:

  1. Those employees who are locked out will not be required at work and will not be paid; and
  2. All other employees are required at work and will be paid.

We will be talking to those employees, their managers and their union representatives about how we best manage the impacts of this situation.

I urge the members of the ALAEA, TWU and AIPA to consider their own interests and tell their leaders they want to reach reasonable and fair agreements that will be good for them and for Qantas.

I want to say how sorry I am that this course of action has become necessary.

We will be doing all we can to care for our customers.

For those who are mid-journey, we will assist with accommodation and endeavour to help with alternate flights, and any other support we are able to give.

We will provide a full refund to any customer who chooses to cancel their trip because their flight has been directly affected by the grounding of our fleet, and extend full rebooking flexibility for anyone wishing to defer their travel.

Our customer service staff will have my full support to assist our customers in any way they can.

We will have continuous updates on qantas.com and that will be the best source of information.

We will also be using our Facebook and twitter feeds to keep customers updated.

This course of action has been forced upon us by the extreme and damaging course chosen by the leaders of three unions.

It is now over to them.

The ball is in their court.

They must decide just how badly they want to hurt Qantas, their members, our other employees, and the travelling public of Australia in pursuit of their destructive aims.



Related posts:
  1. Alan Joyce audio from the Qantas Press Conference (grounding the airline): 29th October 2011
  2. [Video] Qantas – Our National Outsourcer
  3. Qantas to Resume Operations – Industrial Action Terminated by FWA
  4. FULL AUDIO of the Qantas Press Conference: 31st October 2011
  5. Australian Pilot Dispute of 1989
  6. Qantas morale (& more QF30 pics)
  7. New Qantas Advertising Campaign

About Marty

Marty is an International airline pilot, commercial helicopter pilot and experienced flight instructor. He is also the Director of a media company based in Sydney, Australia. Connect with Marty on Twitter, Flight Podcast or Google+.

Comments

  1. Concerned Australian says:

    I applaud Alan Joyce. A brilliant move by an excellent executitive. The Unions are holding not only tourism but in turn, the country, to randsom with unrealistic demands in a Global Economic downturn. Quantas baggage handlers currently earn 10% more than Virign handlers and the pilots fly 40% less time annually than Emirates for a higher salary. How selfish and Jurrasic in are the Union’s attitudes? Discraceful. The airline is losing $15m per week and have obviously been left with no alternative. The Union’s agreed to standby the decisions of the stakeholders and immediately turned about face after unaminous support of Quantas management by the stakeholders. The Union’s threatened and indicated the possibility of a year of industrial action; @ $15m/day? ?? The Union “paid for” Federal Government, and that embarrasement, Anthony Albanese, are “suprised” at this action – where have these clowns (no disrespect to Circus workers) been for the last 10months? Are they so short sighted or limited in business accumen that they didn’t see this happening??? They say Alan Joyce had been planning this for days or weeks? I should hope so or I would be very disappointed in the stewardship of the airline. I take my hat off…..

  2. The Lying Kangaroo. If things are so bad at Asian Kangaroo Airlines Maybe it should cut Alan Joyce pay by 5 million dollars. This is absolutely breathtaking. The CEO has had saturation national media coverage, telling everyone that the Union’s demands for more pay are putting the Company at risk. Then, he accepts a 70% pay rise for himself, even though the Qantas share price has fallen 65% under his command?. I am dumbfounded by the audacity of this man. It definitely is pure greed at its worst. If Qantas fails, it will fail under the weight of its top heavy management. I have been a devoted Qantas Frequent flyer for 22 years, but no more!. The Qantas board seems determined to see this iconic company moved offshore. The demands and requests of pilots and maintenance staff should be taken very seriously! Can a plane fly without a pilot? Shouldn’t someone that holds 400 lives plus in their hands be worth more then the measly 2.5% increase they are asking for? Or is it that Joyce just can’t afford to pay that because his too busy paying himself $5 million dollars? This once great airline will be finished at the hands of an Irish man and will go down in history as Disgraceful!

    Kind Regards
    Miss X

Trackbacks

  1. [...] Tweet Following is the audio from yesterday’s Qantas press conference in Sydney. It supplements the transcript we provided yesterday. [...]

Please leave a comment or question

*