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Qantas to Close Maintenance Plant as Boeing 747s Retired

Qantas Airways Ltd. (QAN), Australia’s largest carrier, said it will close its heavy maintenance plant in Victoria state at the end of March as the airline retires its fleet of Boeing Co. (BA) 747 jets.

“There is not enough work to keep our Avalon base viable and productive,” Lyell Strambi, chief executive officer of the airline’s domestic unit, said in a statement to the ASX today. “The only realistic answer is to close Avalon and have the maintenance performed on our 747s at another facility.”

The closure will affect 53 employees and result in one-off costs for the 2014 financial year of about A$28 million ($26 million), with net benefits from the following year, the airline said. It is assessing whether to carry out the work at other Australian sites, or move the work to Germany, Singapore, Hong Kong, the U.K. or U.S. The airline will continue heavy maintenance of aircraft at its facility in Brisbane, according to the statement.

Qantas announced last year it would shed 450 engineers at bases in Sydney and Avalon as it tries to pare labor costs that were the highest among major listed carriers worldwide. The latest job losses at Avalon are on top of last year’s announced staff reduction, Luke Enright, a spokesman at Qantas said by phone.

The airline, which says it employs about 4,400 people in its engineering division, in May 2012 announced it would close its heavy maintenance facility at Melbourne airport and ultimately consolidate this type of maintenance to one site, probably Brisbane. Qantas said today that about 246 contractors would also be affected by the closure at Avalon.

Heavy maintenance refers to major overhauls of aircraft that can take as long as two months of engineering work. Line maintenance, which Qantas says it undertakes at 19 airports around Australia, is the regular checks and servicing of aircraft.

To contact the reporter on this story: Edward Johnson in Sydney at ejohnson28@bloomberg.net

To contact the editor responsible for this story: Edward Johnson at ejohnson28@bloomberg.net

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