Qantas Airways says it will shed 5,000 jobs as it posted a first-half loss of 235 million Australian dollars (£127m) amid tougher competition, sending its shares down more than 7 per cent.
The loss for the six months to December 2013 followed a 111 million-dollar (£68.6m) profit for the same period a year earlier. The loss excluding one-time factors was 252 million dollars.
The airline has struggled on international routes and its dominance on Australian domestic routes has been eroded.
The Australian flag carrier said it planned to reduce costs by two billion dollars over three years. The job cuts amount to just under one sixth of Qantas’s workforce of 32,000.
Chief executive Alan Joyce said the fleet would be reduced from 11 to seven aircraft types and wages would be frozen until the airline made a profit. He will discuss the job cuts with unions today.
Australia had been “hit by a giant wave of international airline capacity” with a 46 per cent increase in passenger seats since 2009. “We are facing the toughest conditions Qantas has ever seen,” Mr Joyce said. “This performance by our airlines is unacceptable and the current position is unsustainable,” he said, referring to Qantas and its Jetstar Group subsidiary.
The Australian government is considering reducing foreign ownership restrictions imposed in 1992 before the state-owned airline was privatised, which would allow the airline to receive a cash infusion by bringing in a new investor or investors.
The government has also discussed with Qantas providing a standby debt facility backed by a government guarantee, for which Qantas would pay a fee.
Qantas argues that the 49 per cent cap on foreign ownership, 35 per cent limit on ownership by foreign airlines and 25 per cent cap on ownership by any single foreign investor put it at a disadvantage against state-owned competitors in raising capital.
Prime minister Tony Abbott said: “We want to ensure that Qantas is not competing against its rivals with a ball and chain around its leg.”
State-owned Air New Zealand, which has 24.5 per cent stake in Qantas’s major rival Virgin Australia, posted a record half-year profit of £70 million.