Qantas chief executive of domestic and international operations, Andrew David said the industry has been turned "upside down" and it will take years to recoup from the financial damage inflicted by the global shutdown.
"This is another tough day for Qantas, particularly for our ground handling teams and their families," David said.
"Unfortunately, Covid has turned aviation upside down. Airlines around the world are having to make dramatic decisions in order to survive and the damage will take years to repair."
The premier airline said impacted staff will be entitled to redundancy packages and will help workers find jobs outside of the company.
It is expected the outsourcing of ground handling operations will reduce costs by $100 million annually and avoid large spending on ground handling equipment.
Since the beginning of the pandemic, Qantas has taken on an additional $1.5 billion in debt in order to keep the business afloat.
"While there has been some good news recently with domestic borders, international travel isn't expected to return to pre-Covid levels until at least 2024," David said.
"We have a massive job ahead of us to repay debt and we know our competitors are aggressively cutting costs to emerge leaner."
The Transport Workers Union (TWU) had submitted bids on behalf of ground handling staff for operations to stay with Qantas, however were unsuccessful and did not meet the airline's requirements.
Qantas had made three separate extension for the TWU, but Mr David said the union failed to "outline sufficient practical detail".
"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," he said.
The TWU said outsourced specialist ground handlers were unsafe and that the bid was a sham process.
It also claimed outsourcing would lower wages and working conditions, and Qantas was rorting the federal government's JobKeeper wage subsidy scheme.
Qantas refutes these claims.
