Qantas has just revealed a post-coronavirus recovery plan, which will see the airline grounding 100 planes for around 12 months (and in some cases even longer), and laying off around 6,000 employees.
Qantas’ future fleet plans
With Australia expected to remain closed to visitors from most countries throughout 2020 and beyond, Qantas has a bleak outlook on a recovery for travel demand. As a result, Qantas will significantly adjust its fleet. What should we expect?
- Qantas will ground up to 100 aircraft for up to 12 months (some for longer), including most of the international fleet; the majority of planes are expected to ultimately go back into service, but some leased aircraft may be returned as they fall due
- Qantas will retire all six Boeing 747s immediately, six months ahead of schedule
- Airbus A321neo and Boeing 787-9 deliveries will be deferred
Even most Qantas 787s will be grounded for quite a while
And then there’s the A380…
Could Qantas’ A380s never fly again?
Qantas notes that while most long haul aircraft are expected to steadily return to service over time, there is significant uncertainty as to when flying levels will support the fleet of 12 Airbus A380s.
These planes will be idle for the foreseeable future, “which represents a significant percentage of their remaining useful life.”
The carrying value of the A380 fleet, spare engines, and spare parts, will be written down to their fair value, resulting in an estimated non-cash impairment charge in FY2020. This represents the majority of the asset impairment charge of 1.25-1.4 billion AUD.
With Qantas having no plans to bring the A380 back into service in the next few years, one has to wonder if the A380 will ever make a return at the airline. This is also the only plane in Qantas’ fleet to feature first class, so the end of the A380 would also spell the end of Qantas first class.
And to think, Qantas just spent tens of millions of dollars reconfiguring A380s with new cabins.
Qantas has just outfitted some A380s with new cabins
Qantas isn’t alone in reconsidering the A380 as a result of the current pandemic. Air France retired its entire A380 fleet as a result of the current pandemic, and Lufthansa doesn’t plan on flying its A380 fleet in the next couple of years either.
Qantas will lay off 6,000 staff
Qantas currently employs around 29,000 people. Of those:
- 8,000 are expected to return to work by the end of July 2020
- 15,000 are expected to return to work by the end of December 2020
- 21,000 are expected to return to work by June 2022
Therefore the company is proposing redundancies for around 6,000 roles, while 15,000 employees will temporarily be managed through a mix of stand down, annual leave, and leave without pay.
Qantas will start consulting with unions, but the plan is for redundancies to impact the following areas of Qantas and Jetstar:
- Non-operational – at least 1,450 job losses, mainly in corporate roles, due to less flying activity
- Ground operations – at least 1,500 job losses across airports, baggage handling, fleet presentation and ramp operations due to less flying activity
- Cabin crew – at least 1,050 job losses due to early retirement of the 747s and less flying activity; further 6,900 cabin crew will be on stand down from July 2020 onwards
- Engineering – at least 630 job losses due to 747 retirement, less flying activity (particularly of the wide body fleet) and redistribution of work from Jetstar’s Newcastle base to make better use of existing maintenance capacity in Melbourne
- Pilots – at least 220 job losses mostly due to early retirement of the 747s; a further 2,900 pilots will be on stand down from July 2020 onward
6,000 Qantas employees will be made redundant
Bottom line
Australia more or less has coronavirus under control, and that’s also largely thanks to shutting off from the outside world. While it’s nice that life in Australia can mostly return to normal, closed borders aren’t ideal for Qantas.
It’s not surprising to see Qantas take such drastic action, given that it’s unlikely most international travel will be allowed anytime soon.
Unfortunately Qantas will be laying off about 6,000 employees, and also plans to keep 100 planes grounded for around a year. Not only that, but there are no plans to bring the A380s back into service in the next few years, which sure makes you wonder if they’ll ever fly again.
What do you make of this development from Qantas?
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