Joyce talks tough with unions on cuts

Qantas boss Alan Joyce has made clear to unions that the airline must lower its costs substantially to make it competitive against Virgin Australia but has remained steadfast in his strategy in the domestic market.

The chance of the federal government agreeing to any financial assistance for Qantas before the Christmas break is lessening, with key ministers including Treasurer Joe Hockey due to go on leave.

Qantas chief executive Alan Joyce has refused to give union leaders commitments over jobs, saying he could not "rule anything in or out" while the airline considers a shake-up of its operations.

Mr Joyce and his senior executives met heavyweights from a number of unions representing most of the airline's 33,000-strong workforce at its Sydney headquarters on Wednesday.

President of the pilots' union, Nathan Safe, said management made clear that Qantas would not walk away from its strategy of maintaining a 65 per cent share of the domestic market, despite some investors questioning whether it came at too high a price.

"The over-arching theme was that, one way or another, they are going to reduce our costs," Mr Safe said.

"We are happy to listen to their concerns, and we acknowledge that there are serious pressures, but we expect them to listen to ours in return."

Qantas is trying to cut the cost of its premium domestic operations to within 5 per cent of Virgin's by 2015, down from about 10 to 15 per cent at present. It plans to axe at least 1000 jobs in the next year, and strip out an extra $2 billion in costs in the next three years, after warning this month of a first-half loss of up to $300 million.

It is also considering partial sales of the Frequent Flyer loyalty program and Jetstar, and outright sales of other businesses such as freight.

The airline's executives did not reveal to unions which parts of the business would be hit hardest by the job cuts, other than to say it would be a staged process.

It was understandable that some unions sought commitments about jobs "but with an all-options structural review of the business under way it would be disingenuous for us to rule anything in or out", Mr Joyce said. "We made it clear that the $2 billion cost-reduction program and the need for accelerated change were non-negotiables."

Last week Qantas sought voluntary redundancies from domestic cabin crew, engineering support staff and managers.

Head of the international flight attendants union, Michael Mijatov, said it was important unions worked closely with the company to "prevent a catastrophe like the Ansett collapse".

Managers used the meeting to highlight the "extreme challenges we face, including an uneven playing field and the need to make the tough decisions to speed up the transformation of our business", Mr Joyce said. "To their credit, the unions seemed to understand that the policy settings in Australia's aviation industry mean Qantas is effectively competing with one arm tied behind our back.

"There seemed to be a clear appreciation of the magnitude of the challenge we're facing, particularly in terms of addressing our cost base given the changes in the broader aviation market."

Qantas continues to discuss the possibility of financial help with the federal government.

Mr Joyce has repeatedly refused to reveal what form of assistance he wants, but reiterated on Wednesday that none of the options being discussed would "change the need to make the tough decisions needed to transform the business".