Qantas grounds fleet as CEO demands end to union strikes

Move leaves thousands of passengers stranded, will cost Aussie carrier $21m a day
Qantas grounds fleet as CEO demands end to union strikes
The grounding will keep 108 planes that fly to 22 airports out of the sky, Qantas said
By Bloomberg
Sun 30 Oct 2011 07:40 AM

Qantas Airways grounded its fleet after sporadic strikes by
unions, paving the way for Australian aviation’s biggest disruption in two
decades.

The grounding of international and domestic operations will
keep 108 planes that fly from 22 airports out of the air and cost the carrier
A$20m ($21m) a day, chief executive officer Alan Joyce told reporters in Sydney
on Saturday.

“Sixty-eight thousand Australians and the tourism industry
have been grossly inconvenienced by this high-handed ambush,” Assistant
Treasurer Bill Shorten told the Australian Broadcasting Corp. today. “There is
no case for this radical overreaction. In industrial disputes, sure, employers
have views and unions have views, but what I don’t support though is the
no-warning nature of what’s happened.”

The suspension adds to the 600 flights already canceled
since union walkouts disrupted traveling plans for 70,000 passengers. Among
those without flights are 17 heads of state at a conference in Perth. Joyce,
45, calling the unions’ campaign for higher pay and job-security clauses
“impossible demands,” said he’s ready to halt operations until workers relent.
An overnight hearing by the nation’s labour tribunal, which ended without
resolution after three hours, will resume at 2 pm today in Melbourne.

“If this action continues as the unions have promised, we
will have no choice but to close down Qantas part by part,” Joyce said. “The
airline will be grounded as long as it takes to reach a conclusion.”

Workers at Qantas from three labor unions will be locked out
from 8pm Oct 31 “until further notice,” Joyce said.

Qantas, Australia’s largest airline, has lost A$68m this
year from the conflict with unions representing long-haul pilots, engineers and
baggage handlers, as strikes led to flight cancellations. The stock has fallen
39 percent in 2011.

Based on its August traffic figures, the Sydney-based carrier
flew more than 63,000 passengers on average every day.

Unions have stepped up action since Qantas announced plans
in August to eliminate 1,000 jobs, reduce routes and establish new ventures in
Southeast Asia and Japan.

Qantas engineers want to ensure maintenance on new aircraft
such as Airbus SAS A380s and Boeing Co. 787s is done in Australia, as older
planes like 767s are retired. The baggage handlers are seeking to stem the use
of contract labour, while long-haul pilots want to be under the same employment
conditions whether they fly for the Qantas-branded unit or Jetstar.

The grounding is “pre-meditated, unnecessary and grossly
irresponsible,” the Australian & International Pilots Association said in a
statement.

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The government applied to the labor regulator, Fair Work
Australia, to terminate all strikes at Qantas. The tribunal, after a three-hour
meeting that ran into early Sunday, didn’t make a decision. The hearing will
resume today to hear additional evidence from the government, Qantas and all
three unions, said Justice Geoffrey Giudice.

If Fair Work orders a termination, Qantas will submit a
“safety case” to Australia’s aviation regulator to resume operations, Joyce
told Sky television in an interview today. Once approved by the regulator,
Qantas can begin flying within six hours, he said.

The disruption comes amid the Commonwealth Heads of
Government Meeting in Perth, a summit with leaders from 54 nations including
Canada, Australia and the UK, many of which share Queen Elizabeth II as their
head of state. Seventeen leaders are searching for alternative travel
arrangements, the group said.

Prime Minister Julia Gillard, speaking at a press conference
in Perth yesterday, said the strike was “not at all” embarrassing for her
government.

CEO Joyce “needs to break the unions like Margaret Thatcher
did with the coal miners,” said Odia Ukoko, a 44-year- old Melbourne-based
businessman who was in Perth to seek meetings with CHOGM delegates. “If he
breaks the union, I won’t buy Qantas tickets but I’ll buy Qantas shares.”

The grounding may become the biggest disruption to aviation
in Australia since a six-month national dispute in 1989 saw domestic pilots
impose a limit on work hours during a campaign for a 29 percent pay rise. The
Royal Australian Air Force stepped in to keep domestic travel running.

Transport Minister Anthony Albanese said the government was
given less than three hours’ notice of Qantas’s decision.

“I indicated very clearly to Mr. Joyce that I was disturbed
by the fact that we’ve had a number of discussions and at no stage has Mr.
Joyce indicated to me that this was an action that was under consideration,”
Albanese said. “It’s certainly a breach of faith with the government.”

Flights on the company’s Jetstar budget unit, Qantaslink
regional carrier and those by its Jetconnect business to New Zealand will
continue. Qantas has about 65 percent of Australia’s domestic market and less
than 20 percent of international travel.

International Consolidated Airlines Group’s British Airways,
a Qantas partner in the Oneworld airline alliance, said its flights aren’t
affected and it offered refunds and rebooking for ticket holders booked on BA
services operated by Qantas.

Virgin Australia, the nation’s second-largest carrier, will
try to assist stranded domestic travelers and may put on more services. It is
also speaking to partners Etihad Airways, Air New Zealand, Singapore Airlines and
Delta Air Lines Inc. to help with international travelers.

In a statement, Etihad said options being discussed with
Virgin Australia include operating a shuttle service between Sydney and
Melbourne on certain days of the week using Etihad airplanes, and a daily flight
between Sydney and Bangkok.

Locked-out employees will not be required to work and won’t
be paid while other staff are required to operate as normal, Qantas said
yesterday.

“This is one way of bringing it to a head,” said Peter
Harbison, executive chairman at Sydney-based CAPA Centre for Aviation, an
industry adviser. “This looks like an attempt to put it behind them before the
Christmas period.”

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