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Qantas warns of bumpy ride as it cuts budgets | Qantas warns of bumpy ride as it cuts budgets |
(about 5 hours later) | |
Australia's Flying Kangaroo is facing the most tempestuous times in its long history. | Australia's Flying Kangaroo is facing the most tempestuous times in its long history. |
Lambasted by trade unions over job cuts, battling record fuel costs and unrelenting competition from subsidised rivals, Qantas has embarked on a ruthless make-or-break plan to revive its wilting fortunes. | Lambasted by trade unions over job cuts, battling record fuel costs and unrelenting competition from subsidised rivals, Qantas has embarked on a ruthless make-or-break plan to revive its wilting fortunes. |
As it prepared to announce its latest financial results on Thursday, Australia's national carrier had repeatedly said that "everything is on the table" as it slashes budgets in pursuit of profit. | |
"We have said that we will be making some tough decisions in order to achieve 2bn Australian dollars (£1.1bn; US$1.8bn) in cost savings over the next three years, which is a consequence of an unprecedented set of market conditions now facing Qantas," the company said this week in a statement. | "We have said that we will be making some tough decisions in order to achieve 2bn Australian dollars (£1.1bn; US$1.8bn) in cost savings over the next three years, which is a consequence of an unprecedented set of market conditions now facing Qantas," the company said this week in a statement. |
An airline that began with flimsy planes ferrying passengers in windy open cockpits in the 1920s has been lobbying the government in Canberra to ease limits in foreign investment or provide state intervention to boost its financial health. | An airline that began with flimsy planes ferrying passengers in windy open cockpits in the 1920s has been lobbying the government in Canberra to ease limits in foreign investment or provide state intervention to boost its financial health. |
Foreign ownership | Foreign ownership |
While unwilling to pour taxpayers' dollars into the country's ailing car industry, Australian Treasurer Joe Hockey appears sympathetic to Qantas's plea for help. | While unwilling to pour taxpayers' dollars into the country's ailing car industry, Australian Treasurer Joe Hockey appears sympathetic to Qantas's plea for help. |
Ministers are drafting new laws to allow foreigners to buy a majority stake in the airline and to strip away other restrictions. | Ministers are drafting new laws to allow foreigners to buy a majority stake in the airline and to strip away other restrictions. |
The Qantas Sale Act, brought in under a Labor administration in 1992, prevents overseas interests owning more than 49% of the company. It also blocks any single foreign investor holding more than a quarter of its shares. | The Qantas Sale Act, brought in under a Labor administration in 1992, prevents overseas interests owning more than 49% of the company. It also blocks any single foreign investor holding more than a quarter of its shares. |
Qantas management has argued the legislation distorts the market and stifles its ability to grow. | Qantas management has argued the legislation distorts the market and stifles its ability to grow. |
"The government is philosophically attracted to levelling the playing field," said the federal Transport Minister, Warren Truss. | "The government is philosophically attracted to levelling the playing field," said the federal Transport Minister, Warren Truss. |
The Labor opposition has insisted that Qantas should be supported by the state because it would be against the national interest for it to fold. | The Labor opposition has insisted that Qantas should be supported by the state because it would be against the national interest for it to fold. |
Rival complaints | Rival complaints |
Earlier this month, Virgin boss Sir Richard Branson took out a full-page advertisement in Australian newspapers urging Canberra not to give a financial leg-up to its arch-rival. | Earlier this month, Virgin boss Sir Richard Branson took out a full-page advertisement in Australian newspapers urging Canberra not to give a financial leg-up to its arch-rival. |
"Should the Australian taxpayer be forced by the Australian government to prop up the Qantas Group, as federal Treasurer Joe Hockey is suggesting, businesspeople worldwide should think twice about investing in Australia for fear of such intervention in their sectors," Sir Richard wrote in the ad. | "Should the Australian taxpayer be forced by the Australian government to prop up the Qantas Group, as federal Treasurer Joe Hockey is suggesting, businesspeople worldwide should think twice about investing in Australia for fear of such intervention in their sectors," Sir Richard wrote in the ad. |
"It is not right for the industry and it will not benefit the travelling public or the economy." | "It is not right for the industry and it will not benefit the travelling public or the economy." |
Sir Richard's comments were a further escalation in a sky-high dispute. | Sir Richard's comments were a further escalation in a sky-high dispute. |
Qantas claims that it is unfairly hobbled in its fight for customers because domestic rival Virgin Australia is largely owned by three government-backed operators - Air New Zealand, Etihad and Singapore Airlines. | Qantas claims that it is unfairly hobbled in its fight for customers because domestic rival Virgin Australia is largely owned by three government-backed operators - Air New Zealand, Etihad and Singapore Airlines. |
Even Virgin Australia's usually measured chief executive, John Borghetti, felt the urge to come out swinging, accusing the competition of being underhand. | Even Virgin Australia's usually measured chief executive, John Borghetti, felt the urge to come out swinging, accusing the competition of being underhand. |
"This is all about Qantas trying to get a free ride, and there's no doubt about that," he argued on Australian radio. | "This is all about Qantas trying to get a free ride, and there's no doubt about that," he argued on Australian radio. |
The Flying 'Roo has repeatedly stressed that it does not want handouts but rather a debt guarantee from the government that would allow it to borrow at more favourable interest rates. The airline is under pressure to tame its finances as ministers consider their next move. | The Flying 'Roo has repeatedly stressed that it does not want handouts but rather a debt guarantee from the government that would allow it to borrow at more favourable interest rates. The airline is under pressure to tame its finances as ministers consider their next move. |
'Megaphone diplomacy' | 'Megaphone diplomacy' |
Media commentators, however, accuse the carrier's executives of leaking information earlier this week about sweeping job cuts to force Canberra to intervene at a time when unemployment in Australia is creeping higher. | Media commentators, however, accuse the carrier's executives of leaking information earlier this week about sweeping job cuts to force Canberra to intervene at a time when unemployment in Australia is creeping higher. |
"This is megaphone diplomacy at its worst," said John Durie from The Australian newspaper. | "This is megaphone diplomacy at its worst," said John Durie from The Australian newspaper. |
"The obvious intent of this [speculation about job losses] is to get some sort of government assistance but each time we get one of these headlines, which are deliberately encouraged by Qantas, it just damages the Qantas brand and I think it is ultimately self-destructive." | "The obvious intent of this [speculation about job losses] is to get some sort of government assistance but each time we get one of these headlines, which are deliberately encouraged by Qantas, it just damages the Qantas brand and I think it is ultimately self-destructive." |
In trade union circles, there is anger and anxiety about a workforce facing significant redundancies. | In trade union circles, there is anger and anxiety about a workforce facing significant redundancies. |
The national secretary of the Transport Workers' Union, Tony Sheldon, blames Qantas's ill-advised foray into neighbouring markets through its budget carrier Jetstar. | The national secretary of the Transport Workers' Union, Tony Sheldon, blames Qantas's ill-advised foray into neighbouring markets through its budget carrier Jetstar. |
"Quite clearly the company has made some very poor strategic decisions about its investment in Asia with its Jetstar operations," he said. | "Quite clearly the company has made some very poor strategic decisions about its investment in Asia with its Jetstar operations," he said. |
Michael McCarthy, chief strategist for CMC Markets in Australia, says these are critical times for the famous old company. | Michael McCarthy, chief strategist for CMC Markets in Australia, says these are critical times for the famous old company. |
"It certainly has sentimental support but those of us who are involved in markets tend to think it must sink or swim on its own merit," he said. | "It certainly has sentimental support but those of us who are involved in markets tend to think it must sink or swim on its own merit," he said. |
In 1921, the Qantas fleet consisted of two humble biplanes. It has grown to become a treasured part of the Australian story, connecting not only distant parts of this vast island, but also providing a gateway to places far beyond. | In 1921, the Qantas fleet consisted of two humble biplanes. It has grown to become a treasured part of the Australian story, connecting not only distant parts of this vast island, but also providing a gateway to places far beyond. |
A country now waits to see what sort of drama the next chapter of this turbulent story will bring. | A country now waits to see what sort of drama the next chapter of this turbulent story will bring. |