A market update to the ASX on Thursday said a two-year wage freeze would also be imposed across the airline’s workforce and management, with 2 per cent annual pay rises after that period, instead of 3 per cent pre-COVID. International cabin crew will be asked to volunteer for redundancy, with several hundred expected to apply.The move follows the latest delay in the likely reopening of international borders, with Qantas pushing back its planned resumption of overseas flights from late October to mid-December. Along with international pilots, many cabin crew have been stood down since March 2020 with no clear idea of when they might return to work. The job cuts are in addition to the 8500 positions already identified as surplus to requirements, including 2500 ground-handling jobs which have been outsourced to third-party providers. The Qantas Group is expecting an annual loss in excess of $2bn for the 2021 financial year, after losing $16bn since the COVID crisis began. But strong domestic demand is helping the airline to rein in debt, which peaked at $6.4bn in February but is expected to be under $6.05bn by July. Qantas ASX chart (QAN)Group CEO Alan Joyce said there was still a long way to go in the airline’s recovery but it did feel like it was turning the corner. Of the 22,000 employees, 16,000 were now back at work, including all domestic crew and corporate staff, and some international crew. “Our recovery strategy of targeting cash-positive flying rather than pre-COVID margins is helping increase activity levels and repair our balance sheet,” Mr Joyce said.“The fact we’re making inroads to the debt we needed to get through this crisis shows the business is now on a more sustainable footing. The main driver is the rebound of domestic travel, which now looks like it will be bigger than it was pre-COVID, at least until international borders re-open.”He said it was encouraging to see the strong leisure demand over Easter and the school holidays which had resulted in Jetstar being profitable on an underlying earnings basis in April. “Managing costs remains a critical part of our recovery, especially given the revenue we’ve lost and the intensely competitive market we’re in,” said Mr Joyce.“We’ve adjusted our expectations for when international borders will start opening based on the government’s new timeline, but our fundamental assumption remains the same – that once the national vaccine rollout is effectively complete, Australia can and should open up. That’s why we have aligned the date for international flights restarting in earnest with a successful vaccination program.”He echoed the warnings of others in the travel industry including Virgin Australia CEO Jayne Hrdlicka that the country risked being left behind if it did not step up the vaccination rollout and reopen borders. “No one wants to lose the tremendous success we’ve had at managing COVID but rolling out the vaccine totally changes the equation,” said Mr Joyce. “The risk then flips to Australia being left behind when countries like the US and UK are getting back to normal. Australia has to put the same intensity into the vaccine rollout as we’ve put on lockdowns and restrictions, because only then will we have the confidence to open up.”
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