Qantas responds to deterioration: cuts 5,000 jobs & 50 aircraft – but changes are overdue

A surge of domestic and international capacity have largely contributed to Qantas' underlying PBT loss of AUD252 million in the first half, traditionally the stronger period. With 5,000 full-time jobs to be eliminated and 50 aircraft to be cut or deferred, it is a larger restructure than previous momentous changes, but the conditions are not just heightened but, according to CEO Alan Joyce, the worst the company has seen in its history.

The conditions have also galvanised Qantas to make over-due changes. After bringing needed efficiency to its front line employees, Qantas was left with a bloated back office. Overall, Qantas staff are paid more than at Virgin Australia but are less productive.

There are capacity adjustments and a single route cancellation (Singapore-Perth) to the international network, which are needed. A380s will be deferred - again - but it has become difficult to eventually see a home for them. Likewise for Jetstar's last three 787s that it will defer; Jetstar is focusing on short-haul flying, wise as more efficient long-haul LCC capacity ramps up. Jetstar remains in tact - including growth at Jetstar Japan and continuing to work to launch Jetstar Hong Kong.

The Qantas Loyalty programme remains part of the group, overall smart moves that Mr Joyce will no doubt be heckled by his unions (and some investors) for. Qantas will receive AUD112 million from an agreement with Brisbane airport, while in coming days Qantas is expected to have its debt guaranteed by the government.