Grant Bradley

Aviation, tourism and energy writer for the Business Herald

Jobs under threat, but Jetstar says it's committed to NZ

Photo / Greg Bowker
Photo / Greg Bowker

Jetstar says it remains committed to New Zealand amid speculation its parent Qantas is set to announce it will axe thousands of jobs when it releases its financial results on Thursday.

Jetstar chief executive for Australia and New Zealand, David Hall said he could not comment on reports of job losses or the financial plight of Qantas, but his airline was performing well in this country.

"There's a lot of speculation of the eve of any announcement and I'm not going to comment on it but we're very pleased with our business here. We're certainly in it for the long haul, we're committed to the market and we're always looking for growth," Hall said.

The airline launched domestic operations here in June 2009, flying main trunk routes in competition to Air New Zealand, after starting transtasman services four years earlier.

"We're in a blackout period at the moment but for the year ended June 30 (2013) we carried over 1.8 million customers and we're seeing comparable numbers this year," Hall said.

New Zealand was an important part of Jetstar's Australasian operations and the strong economy in this country would further stimulate demand, he said.

While Jetstar's New Zealand financial performance is not specified in Qantas results, the airline has said previously it breaks even or is close to breaking even in this country.

On Thursday Qantas is expected to announced a A$300 million loss for the past six months and up to A$2 billion in cost savings which could mean 3000 job losses.

The airline suffers high legacy labour costs, has had its lucrative domestic corporate market eroded by Virgin Australia, just on 25 per cent owned by Air New Zealand. Qantas has yet to enjoy substantial benefits from its partnership with Emirates which was set up last year to stem large losses the Australian airline has suffered on its long haul routes.

Qantas pulled out of flying from Auckland to Los Angeles in 2012 as part of an early cost cutting drive but its transtasman services are an important part of its network and paid a big dividend last year.

Jetconnect, a New Zealand-based operation was set up with lower labour costs and paid Qantas a $156 million dividend.

Jetstar will tomorrow launch Boeing 787 Dreamliner services between Auckland and Melbourne, three days a week for a month.

Qantas has acknowledged it would be making some "tough decisions'' as part of its cost-cutting program.

"We have said that we will be making some tough decisions in order to achieve $2 billion in cost savings over the next three years, which is a consequence of an unprecedented set of market conditions now facing Qantas,'' it said.

Qantas has been lobbying the federal government for assistance, most likely in the form of a debt guarantee, though possibly also through the lifting of foreign ownership restrictions on the airline.

Australian Finance Minister Mathias Cormann this morning declined to speculate about what assistance the federal government might give Qantas, amid reports the ailing airline could announce the widespread job losses.

The government is considering support for the national carrier, such as a debt guarantee, after the airline complained the Qantas Sale Act was hampering its efforts to compete against the likes of Virgin.

Federal Transport Minister Warren Truss says the government is drafting laws to allow Qantas to be majority foreign-owned and remove other limits on the airline.

The changes to the Qantas Sales Act will lift the 49 per cent foreign ownership limit, as well as alter the restrictions on foreign airlines holding more than a 35 per cent stake and 25 per cent for any single foreign shareholder.

The airline, which is set to unveil a six-month loss on Thursday, has argued the laws distort the market and inhibit its ability to grow.

"We have indicated an interest in being prepared to seek to legislate to take away the legislative and government-imposed disadvantages that Qantas faces on the domestic market," Truss told reporters in Canberra today.

"We are working on legislation to achieve that.

"The government is philosophically attracted to levelling the playing field."

The laws also require the airline to keep most of its maintenance, catering, flight operations and training facilities for its international services in Australia.

Labor and the Greens have vowed to block the legislation in the Senate.

Truss welcomed the fact that Qantas was getting its own house in order, through what was likely to be a "radical restructure".

"If there is going to be response from the government, that will have to take into account whatever Qantas is proposing to do on its own account," Truss said.

He said he had not been briefed in advance on the announcement.

Asked to respond to the speculation about job losses, Senator Cormann repeated the government's view that the Sale Act restricting foreign ownership should be amended.

"Beyond that we are currently considering some proposals that were put before us by Qantas," he told reporters in Canberra this morning.

"When we are in a position to make an announcement we will make an announcement."

The airline reportedly has been negotiating to sell the long-term lease for its Melbourne Airport terminal.

Labor MP Kelvin Thomson said job losses at Qantas would be concerning after those announced by Toyota and Alcoa.

However, he dismissed suggestions that Labor should drop its opposition to changing the Qantas Sale Act.

"Changing the Qantas Sale Act ... means selling Qantas to a foreign corporation. Let's not mince words, that's what it is," he told reporters in Canberra.

"If you sell Qantas to a foreign corporation you essentially lose it and lose all control over it. It is gone."

- with AAP

- NZ Herald

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