Qantas to resume flights today
Mon, 31 Oct 2011 12:17p.m.
By David Koenig and Rod McGuirk
Qantas Airways' flight schedule will return to normal by tomorrow after an Australian court intervened in a bitter labour dispute that prompted the world's 10th-largest airline to ground its entire fleet, the company's chief executive said today.
Alan Joyce said the first of the grounded aircraft would return to the sky this afternoon, around 12 hours after an emergency ruling by an arbitration court ended weeks of strikes and cancelled a staff lockout.
Joyce praised the outcome, which prevents unions from taking any further strike action over their demands for pay hikes and job security clauses under news contracts being negotiated. The strikes have been blamed for a crash in the airline's future bookings.
"The important thing is that all industrial action is now over and we have certainty," Joyce told reporters in Sydney.
"We will be returning to business as usual over the next 24 hours," he said.
By the time the labour-relations court acted, several hundred flights had been cancelled and tens of thousands of passengers stranded around the world.
Some airline industry experts say Qantas' surprise grounding of its entire fleet Saturday could cause many travellers to book future trips on other airlines.
Qantas CEO Alan Joyce said he had no choice but to order the lockout of union workers and end months of rolling strikes that led to cancelled flights, NZ$85.5 million in losses and a collapse in future bookings.
Joyce told the Australian Broadcasting Corp. that he expected some flights to resume by mid-afternoon Monday. It was unclear how long it would take for the airline to resume a full schedule. The airline had estimated that it would lose NZ$24.4 million a day during the lockout.
The Australian labour-relations court issued its ruling ending the standoff early Monday morning - midday Sunday in the United States - after holding an emergency hearing that included testimony from company, labour union and government officials.
The president of the labour-arbitration panel, Geoffrey Giudice, said the group acted to protect Australia's tourism and aviation industry.
The airline said 447 flights had been cancelled in the first 24 hours of the lockout. Qantas did not immediately update that figure.
Qantas is the largest of Australia's four national domestic airlines, carrying about 70,000 passengers a day on a fleet of 108 planes that operate in 22 countries. In 2010, it was the 16th largest airline in the world by passenger kilometres flown, according to the trade publication Air Transport World.
Its major international destinations include Singapore, Hong Kong and London. In the United States, Qantas flies to Los Angeles, Dallas, New York and Honolulu.
Travellers reported being ordered to leave planes that were already on the tarmac when the lockout began Saturday. More than 60 planes in mid-flight flew to their destinations, then were parked.
Qantas said it paid to rebook passengers on other airlines, including compensating those who had to pay higher last-minute fares to get home.
For several weeks, workers have carried out rolling strikes and refused to work overtime to demand higher pay and protest the airline's plans to cut about 1,000 jobs. Qantas, which has about 32,500 employees, wants to reduce costs by creating new Asia-based airlines for international flying. International flights were a roughly NZ$240 million drain on the company last year.
The company reported in August that annual profit had doubled. But it said the business climate was too turbulent - partly because of labour turmoil - to forecast future earnings.
Henry Harteveldt, an airline industry analyst in San Francisco, predicts the shutdown will do long-term damage to the Qantas name by hurting its reputation for reliability.
"A lot of travelers won't take a chance and will book away to Virgin Australia, Air New Zealand and other airlines," Harteveldt said. "Brand loyalty in the airline business is very low, and there is so much competition."
Before the court ruling, Virgin Australia said it was scheduling extra flights and offering 20 percent fare discounts to help stranded Qantas passengers through Thursday.
If Qantas loses customers, that could also hurt partners in its alliance of global airlines, including American Airlines. A rival alliance that includes Air New Zealand and is led by United Continental Holdings Inc. could benefit. So could a third group of airlines that includes several major Asian carriers and is led by Delta Air Lines Inc. and Air France-KLM.
Other industry veterans said the lockout was a daring move that will pay off for Qantas, which wants to expand the low-cost, low-fare model that it uses at its Jetstar Airways subsidiary.
Jetstar has extensive routes to Southeast Asia and Japan, and lower costs than Qantas. But Qantas unions fear that expansion of low-cost airlines will result in Australian jobs being sent overseas. CEO Joyce hopes to bend the unions closer to the company's vision for growth by tapping into Asian markets.
"It was a very shrewd move by their CEO to force the issue and stop the potential deterioration of the brand," said Mo Garfinkle, an airline consultant who has worked for Qantas rival Virgin Australia. "In the end, it will benefit Qantas financially."
Garfinkle said the short duration of the fleet grounding will help Qantas get back up to full speed quickly, cutting its losses.
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