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Qantas ‘mulls some job cuts’ in slower revenue environment

November 8, 2019 Headline News No Comments Email Email

Qantas is likely to cut some middle management jobs, but the exact numbers involved have not been revealed, according to reports yesterday.

9News and other outlets reported that job cuts were on the table.

Protests in Hong Kong will negatively impact the Qantas Group’s first half profit performance by AUD 25 million, with ongoing capacity reduction in place to minimise the second half impact, the company said.

Delivering the company’s first quarter update, Qantas Group chief executive Alan Joyce said: “Given the slower revenue environment, we have a strong focus on cost reduction to make sure we keep delivering on our transformation targets.

“Part of this is about taking opportunities to reduce complexity and constantly improving how efficiently we manage our business.”

Joyce said the record revenue result for quarter one showed the national carrier was positioned well to respond to continued mixed market conditions.

“The Group continues to perform well, with strength in key parts of our portfolio helping to offset softness in other areas,” he said.

“Qantas International has seen significant upside from competitor capacity contracting more than anticipated, which is expected to continue for at least the remainder of the first half.

“Domestically, published competitor capacity is set to increase despite the weakness in the market. The Qantas Group will maintain its strategic position in all parts of the market and therefore our total domestic capacity is expected to grow by up to 1% in the second half.”

First quarter highlights included:

  • Total Group Revenue up by 1.8% to a record AUD 4.56 billion
  • Increase in Group Unit Revenue driven largely by strong Qantas International performance.
  • Headwinds from foreign exchange expenses, impact from Hong Kong unrest and trade war impact on international freight market.

The Qantas Group continued to deliver revenue growth in the first quarter of FY20, up 1.8% to a record AUD 4.56 billion compared with AUD 4.49 billion in the prior corresponding period. Group Unit Revenue increased 2.1% versus the prior corresponding period. Total Group capacity was down 0.2%. This was driven by a 0.6% decrease for Group International while Group Domestic increased by 0.5% due largely to growth in the resources market.

Group Domestic Unit Revenue fell by 0.9% due to mixed market conditions. Resources industry traffic continued to strengthen, helping to offset weaker demand in other parts of the corporate sector such as financial services and telecommunications.

Overall, corporate travel demand was flat and small business travel demand growth slowed – but Qantas’ market share in both these segments continued to increase. Premium leisure demand remained steady.

Demand in the price sensitive leisure market weakened. Jetstar’s Unit Revenue fell by 2.6% and accounted for most of the RASK decline in Group Domestic.  However, Jetstar did benefit from higher load factors that supported ancillary revenue growth.

Group International Unit Revenue increased by 4.4%. This was led by a reduction in competitor capacity as well as benefits of network and fleet changes in Qantas International, which had its own capacity decrease of 2.5% and a Unit Revenue increase of over 6%.

Protests in Hong Kong will negatively impact the Group’s first half profit performance by AUD 25 million, with ongoing capacity reduction in place to minimise the second half impact.

Jetstar International revenue also grew in the quarter, led by strong demand on leisure routes to Asia that offset weakness in markets impacted by the strength of the US Dollar. Jetstar International grew capacity with increased short haul flying to Bali and the return of aircraft from heavy maintenance compared with the corresponding period.

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