- Qantas confirmed it will be outsourcing its ground handling staff after bids for the work failed.
- The airline had allowed in-house and external bids be sent in to spell out how they could reduce costs at its ground handling operations.
- The Transport Workers’ Union said in a statement “This is a dark day”.
- Visit Business Insider Australia’s homepage for more stories.
Qantas will go ahead with outsourcing its ground handling operations, which will result in the loss of 2000 jobs.
The airline said on Monday it will outsource ground handling operations at 10 airports in Australia, as it recovers from the impact of the coronavirus pandemic.
This comes after the airline announced plans to restructure its ground handling operations – including services like aircraft cleaning and baggage handling – and went on to review bids from both external and in-house ground handling service operators on how to make these services more efficient.
The bids had to outline ways they would reduce the overall cost of ground handling operations, avoid huge spending on ground handling equipment and better match the costs of Qantas’ ground handling services with fluctuating levels of demand.
Qantas believed it could save around $100 million a year from using external service providers.
Bids were submitted by the Transport Workers Union (TWU) and from some individual airports but Qantas revealed that none of them were able to met its objectives.
Qantas said the TWU’s bid was, by their own admission, ‘theoretical’ and they had no roadmap of how they would save costs.
“The TWU’s in-house bid claimed that significant savings could be made but it failed to outline sufficient practical detail on how this might be achieved, despite us requesting this information multiple times throughout the process,” Qantas Domestic and International CEO Andrew David said in a statement.
“Even with the involvement of a large accounting firm, the bid falls well short of what the specialist external providers were able to come up with.”
The TWU hit back, with National Secretary Michael Kaine saying in a statement, “To suggest this bid and its cost savings was ‘theoretical’ is an absolute insult to the time and effort which has been put in by workers. The reference to theoretical was the theoretical Qantas flying time schedule which all bids were based on.”
Kaine added that workers were devastated about Qantas rejecting the TWU’s bid.
“This is a dark day as Qantas management rejects a thorough and competitive bid by its highly skilled and dedicated workers to keep their own jobs,” he said.
“Qantas workers have worked hard over recent months with EY to find millions of dollars in cost savings and efficiencies. EY advised us our bid was competitive in comparison to other contractors. To reject its own workers like this is spiteful and will hurt the airline deeply.”
While other local employees had detailed plans on how to save $18 million, Qantas said it was still a big gap compared to outsourcing.
External bidders, some of which already provide services to airports in Australia, managed to meet Qantas’ requirements, including slashing costs by around $103 million. Qantas is slated to transition to these outside bidders during the first quarter of 2021, subject to consultation and contract terms being drawn up.
Qantas said it will consult with ground handling employees and their representatives on the next steps. And those employees who are affected will be offered redundancy packages. It comes as Qantas’s budget airline Jetstar already switched is ground handling operations to external suppliers at six airports.
With these latest round of job cuts, it brings the number of job losses at Qantas to around 8,500 of its 29,000 pre-COVID workforce.
“This is another tough day for Qantas, particularly for our ground handling teams and their families,” Qantas Domestic and International CEO Andrew David said in a statement. “We thank every one of them for their professionalism and contribution over the years supporting our customers and operations.”
David added that while there has been some good news with domestic borders, “international travel isn’t expected to return to pre-COVID levels until at least 2024.
“We have a massive job ahead of us to repay debt and we know our competitors are aggressively cutting costs to emerge leaner.”
The decision to outsource workers comes after Qantas reported a $2.7 billion loss during the 2020 financial year because of the coronavirus and related border closures. The airline expects more losses in the 2021 financial year.
Qantas is also holding an ongoing review on outsourcing crew bus services in and around Sydney Airport, which could impact around 50 workers. It’s set to be complete by the end of the year.
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