Qantas Says Only Strike Ban Will Resume Flights
Stock Chart for Qantas Airways Ltd (QAN)
Qantas Airways Ltd. (QAN) Chief Executive Officer Alan Joyce, who yesterday grounded his fleet because of labor disputes, said only an order by Australia’s industrial regulator halting strikes would ensure a resumption of flights.
Fair Work Australia, the nation's industrial regulator, began hearing closing arguments on whether it should grant a so-called termination order at 8:45 p.m. in Melbourne. The government requested the termination, which would stop Qantas from beginning a planned lockout and trigger a process leading to binding arbitration. Unions have asked for suspensions of strikes ranging from 90 days to 120 days.
“A termination gives us certainty,” Joyce, 45, said on Sky News on Sunday. “A suspension, depending on what the suspension looks like, does not necessarily give us certainty.” The carrier could likely resume flights in about six hours after winning safety approval from the aviation regulator, he said.
More than 68,000 passengers, including 17 heads of state, have been left stranded since Joyce grounded the airline’s main unit without notice in a bid to force an end to weeks of sporadic stoppages by employees seeking higher pay and job- security guarantees. Keeping the 108 planes on the ground will cost Australia’s biggest carrier A$20 million ($21 million) a day, Joyce told reporters in Sydney yesterday.
The Qantas fleet will remain grounded until at least midday tomorrow, according to a notice on the carrier’s Twitter account. A decision on afternoon flights will be made tomorrow, it said.
“There is no case for this radical overreaction,” Bill Shorten, the federal government’s assistant treasurer, told the Australian Broadcasting Corp. “Sixty-eight thousand Australians and the tourism industry have been grossly inconvenienced by this high-handed ambush.”
Fair Work, which began hearings yesterday that ran into the early hours of this morning, can act if a dispute is causing “significant economic harm” to the employers or employees involved or if there is “significant damage to the economy or an important part of it,” according to its website. Its rulings can be enforced by a court order.
Virgin Australia, the nation’s No. 2 carrier, added about 3,500 seats on domestic routes today and plans to lay on an additional 3,000 tomorrow as it boost flights to help stranded Qantas passengers. Partners Singapore Airline Ltd., Etihad Airways and Air New Zealand Ltd. (AIR) may also add services, Virgin said on its Web site. Qantas’s budget arm Jetstar, which isn’t included in the grounding, is also working on adding flights.
Qantas has about 65 percent of Australia’s domestic market and less than 20 percent of international travel. Separately, Air France also canceled flights in Europe today because of a strike by cabin crew.
The stranded Qantas passengers included delegates attending an inter-governmental conference in Perth. Operations at regional carrier Qantaslink and at a unit that flies to New Zealand aren’t affected by the grounding.
Qantas long-haul pilots, among those locked out, have only made inflight announcements and worn red ties, as they seek the same employment conditions whether they fly for the Qantas- branded unit or Jetstar, the Australian & International Pilots Association said on its Web site. These actions haven’t caused flight cancellations, it said.
The grounding and lockout are “a sign that the current management has lost touch with the traveling public, its workers and the basic Australian ethos of free speech,” it said.
Qantas Engineers have staged stoppages wanting to ensure that maintenance on new aircraft such as Airbus SAS A380s and Boeing Co. 787s is done in Australia, as older planes are retired. Baggage handlers have also walked out seeking to stem the use of contract labor.
Air Force Operations
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.
“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.”
The unions have stepped up action since Joyce announced plans in August to eliminate 1,000 jobs, reduce routes and establish new ventures in Southeast Asia and Japan in a bid to end losses at international operations.
Workers at the three unions will be locked out from 8 p.m. on Oct. 31 “until further notice,” Joyce said yesterday. The carrier has lost A$68 million this year from the conflict with unions, as strikes led to flight cancellations.
The carrier’s stock has plummeted 39 percent this year, while Australia’s S&P/ASX 200 Index is down 8.3 percent. The shares lost 1.6 percent to A$1.55 on Oct. 28 in Sydney, valuing the airline at A$3.5 billion.
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 delegates at the inter-governmental summit. “If he breaks the union, I won’t buy Qantas tickets but I’ll buy Qantas shares.”
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