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Qantas Starts New Asia Airline, Cuts 1,000 Jobs

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SYDNEY — Qantas Airways Ltd. said Tuesday it plans to cut up to 1,000 jobs as part of a major shakeup of its international business that will include the launch of a new Asia-based airline.

The flagship Australian carrier, which is struggling to offset losses from its international operations, will buy between 106 and 110 Airbus A320 aircraft, and retire older planes as part of the five-year plan.

It will also defer the delivery of six Airbus A380 superjumbo planes for up to six years. The A380s were earmarked for long-haul routes to destinations such as London on which Qantas has faced increased competition.

The changes are expected to affect around 1,000 jobs, the airline said.

Qantas International has forecast a loss of Australian dollars 200 million ($210 million) for the 2011 financial year due to stiff competition and costs that the airline says are 20 percent higher than its key competitors such as Emirates.

CEO Alan Joyce said the changes were needed to ensure the airline's profitability.

"Qantas International is a great airline with a proud history," Joyce said in a statement. "But it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change."

Under the plan, Qantas will invest in a new premium airline in Asia that will operate under a different name. It will also launch a budget airline in Japan to be called Jetstar Japan in partnership with Japan Airlines Co. and Mitsubishi Corp.

Unions immediately condemned the move, with the Australian Council of Trade Unions accusing the airline of showing "blatant contempt for its loyal work force."

"This is one of the darkest days in the history of Qantas," ACTU Secretary Jeff Lawrence said in a statement. "Today, Qantas management has turned its back on Australia and on Australian jobs to head down the path of a race to the bottom that would see a large section of its work force employed on the pay and conditions of developing countries."

Qantas and its Japanese venture partners said Jetstar Japan plans to start operations by the end of 2012 and will serve domestic routes at first through likely bases at Tokyo's Narita International Airport and Kansai International Airport in Osaka. It ultimately aims to expand to short-haul international routes in Asia.

The announcement of the new budget airline comes less than a month after JAL rival All Nippon Airways Co. and Malaysian budget carrier AirAsia announced a partnership to create a low-cost airline in Japan serving local and international destinations.

Qantas, JAL and Mitsubishi will each own one-third of the new venture, with capitalization of 12 billion yen ($156 million) and an initial fleet of three new Airbus A320 planes. The fleet will expand to 24 aircraft within a few years, the companies said.

Japan Airlines has been restructuring since filing for bankruptcy protection last year.

Qantas shares ended down 0.3 percent at AU$1.52 on the Australian stock market.

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Associated Press Writer Tomoko A. Hosaka in Tokyo contributed.

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