Qantas to outsource more than 2,000 ground crew jobs due to coronavirus pandemic
Qantas is outsourcing more than 2,000 ground staff roles across 10 airports in a bid to lower costs as it faces a financial hit from the coronavirus pandemic.
Baggage handlers, ramp workers and cabin cleaners at airports including Sydney, Melbourne, Brisbane, Perth, Adelaide, Darwin, Cairns, Townsville, Alice Springs and Canberra will lose their jobs.
The outsourcing cuts come on top of 6,000 already announced redundancies across Qantas’s workforce, revealed in June.
Qantas has now cut about 8,500 jobs, out of a pre-COVID workforce of 29,000, due to international travel bans and state border closures.
Jetstar had already outsourced ground handling roles, costing about 370 jobs. That left more than 2,000 baggage handlers and cabin cleaners fighting to keep their jobs.
Earlier this month, the Transport Workers’ Union (TWU) put in a bid for those 2,000 workers to keep their jobs.
“Unfortunately, none of these bids met the objectives,” Qantas said in a statement on Monday.
Qantas has previously estimated about $100 million a year could be saved by outsourcing, and another $80 million saved by avoiding large spending on equipment.
It had also said outsourcing would allow it to match ground handling services with fluctuating levels of demand, on the basis that Qantas expects its flying schedule to be more variable during the COVID-19 crisis and beyond.
Workers to be consulted on next steps
Qantas said it would consult with its ground handling employees and their representatives on the next steps.
“Affected employees will be entitled to a redundancy package and given support to transition to new jobs outside the business,” Qantas said.
“It’s expected that there will be a range of opportunities for some impacted team members with suppliers in the sector as travel demand gradually recovers.”
Qantas said the TWU submitted a bid on behalf of employees, and teams from some individual airports also submitted local proposals.
“Their resulting national bid was, by their own admission, ‘theoretical’ with no roadmap of how projected cost savings would be achieved,” Qantas said.
“For instance, the proposal resulted in 1 million surplus labour hours — or around 900 roles — but no details on how to deal with that surplus.
“It also did not meet the objectives relating to capital expenditure on ground services equipment nor matching the ground handling services (and their cost) to fluctuating levels of demand.”
Qantas said while proposals from employees at various ports did include detailed plans that would save about $18 million, this still left a “significant gap” compared to the savings that could be achieved by accepting bids placed by third-party providers.
“A number of external bidders, some of whom already provide these services at 55 airports across Australia, were able to meet all of the objectives, including reducing annual costs by approximately $103 million,” Qantas said.
The bidders were being notified on Monday, and subject to consultation and finalising contract terms, Mr David said the transition should occur in the first quarter of 2021.
TWU national secretary Michael Kaine said workers were devastated to hear Qantas had rejected the last-ditch bid for their jobs.
“This is a dark day as Qantas management rejects a thorough and competitive bid by its highly skilled and dedicated workers to keep their own jobs,” Mr Kaine said.
The decision is further bad news for Qantas workers. On Friday a consortium of unions lost an appeal in the Federal Court to have Qantas pay sick leave to the 25,000 workers who were temporarily stood down due to COVID-19.
‘COVID has turned aviation upside down’
Qantas domestic and international chief executive Andrew David described it as “another tough day for Qantas, particularly for our ground handling teams and their families”.
“In normal times we wouldn’t consider something of this nature,” he said.
“Unfortunately, COVID has turned aviation upside down. Airlines around the world are having to make dramatic decisions in order to survive and the damage will take years to repair.”
Mr David said while state borders were reopening, international travel was not expected to return to pre-COVID levels until at least 2024.
He said the airline had no further redundancies planned at this stage, but could not rule out further job losses if the crisis worsens.
Qantas Group posted a $2.7 billion loss for the 2020 financial year and suffered a $4 billion hit to its revenue.
The airline is expecting another significant loss this financial year and expects revenue to fall by another $10 billion.
Since the beginning of the pandemic, Qantas Group has taken on more than $1.5 billion in extra debt.
“We have a massive job ahead of us to repay debt and we know our competitors are aggressively cutting costs to emerge leaner,” Mr David said.
TWU’s in-house bid claimed that significant savings could be made, but Mr David said: “It failed to outline sufficient practical detail on how this might be achieved.”
“Even with the involvement of a large accounting firm [EY], the bid falls well short of what the specialist external providers were able to come up with,” he said.
But Mr Kaine said Qantas workers had worked hard with EY to find millions of dollars in cost savings and efficiencies.
The bids, Mr Kaine argued, were not “theoretical”, but based on Qantas’s variable flying time schedule.
“To reject its own workers like this is spiteful and will hurt the airline deeply,” Mr Kaine said.
No risk to safety, says Qantas
Jetstar’s ground operations have already been outsourced across six airports, mostly to Swissport.
Workers and the unions have been warning there is a risk for Qantas passengers if further work is outsourced.
Mr David said that was not the case.
“We have used these specialist ground handlers at many Australian airports for decades and they’ve proven they can deliver a safe and reliable service more efficiently than it’s currently done in-house,” he said.
“This isn’t a reflection on our people but it is a reflection of economies of scale and the urgent need we have because of COVID to unlock these efficiencies.”
But Mr Kaine accused Swissport of already being “exposed over lax standards on safety, service and security”.
In August, Qantas also announced a separate proposal to outsource crew bus services in and around Sydney Airport, potentially impacting about 50 employees.
Qantas said this review process was “ongoing”, with a decision expected before the end of the year.
While airlines have become plagued with debt because of travel bans and border closures implemented to control of the spread of the COVID-19 virus, the industry has also benefited from some Federal Government support.
Since the start of the crisis, the Morrison Government has handed more than $1 billion to the aviation industry, including more than $800 million to Qantas.
The Senate recently established an inquiry into the future of the aviation industry, which is due to report back at the end of March.