Australia's Qantas to launch new Asia airlines, cut jobs
SYDNEY (Reuters) - Australia's Qantas Airways unveiled plans on Tuesday to set up two new Asia-focused airlines, presenting it as a do-or-die shakeup of its international business which also called for a $9 billion fleet upgrade and up to 1,000 job cuts.
Qantas, which has been reviewing its offshore operations to cut costs and unprofitable routes, said it would launch a new, premium Asian airline as well as a Japanese low-cost carrier, the latter jointly with Japan Airlines and Mitsubishi <8058.T>.
"To do nothing, or tinker around the edges, would only guarantee the end of Qantas International in our home Australian market," Chief Executive Alan Joyce told a news conference, noting that the international operation's cost base was around 20 percent higher than its major rivals.
"That would be a tragedy," Joyce added.
He did not say when the new premium airline would be launched. The CEO said Kuala Lumpur and Singapore were being looked at as the hub for the premium airline, but a source with direct knowledge of the plan told Reuters that Qantas was also considering basing it in China.
Qantas faces a possible escalation of industrial action at home over the plan, with trade unions opposed to any move by Qantas to relocate its international operations offshore.
Australia's aircraft engineers' union reacted swiftly on Tuesday, threatening industrial action within two weeks and considering a court challenge on grounds that Qantas' plan was in breach of the terms of its privatization in the early 1990s.
Qantas said up to 1,000 jobs would be put at risk from the shakeup, which involved the retirement of older planes, major changes to the international network and the acquisition of new jets with a total list price of around $9.4 billion.
The fleet changes call for the acquisition of between 106 and 110 Airbus A320 aircraft, including planes for Jetstar Japan and the new premium Asia-based airline. Between 28 and 32 planes of these would be current-generation A320s and the rest the fuel-efficient, next-generation A320neo aircraft.
Qantas also delayed the delivery of its final six A380s for up to six years in a move aimed at conserving capital and bolstering its balance sheet.
It said it would also retire four Boeing 747s.
Qantas reaffirmed its earnings guidance.
(Writing by Mark Bendeich; Editing by Balazs Koranyi, Ed Davies and Muralikumar Anantharman)