Qantas to cut 5,000 jobs

Qantas Airways Ltd has swung to a first-half net loss and unveiled a further 5,000 job losses as the embattled national carrier waits to hear if it will receive any government assistance.

Investors responded poorly to the news. At the 1015 AEDT official market open, Qantas shares were 3.94% lower at $1.22, against a benchmark index slide of 0.4%.

In the six months to December 31, Qantas posted a statutory loss of $235 million, 315.6% decline on the $109 million profit in the previous corresponding period.

The underlying loss for the period came in at $252 million, a 214.5% decline on the $220 million profit recorded in the first half of the previous year.

In December, the debt-laden national carrier flagged an underlying loss before tax of $250 million to $300 million in the six months to December 31.

The result featured bleak results from Qantas' domestic and international operations. Qantas' domestic arm reported underlying earnings before interest and taxation (EBIT) of $57 million, down from $218 million in the previous corresponding period, while the international business reported an underlying EBIT loss of $262 million, compared with a loss of $91 million in the first half of the previous year.

In the same period revenue was $7.903 billion, a 4.1% slide on the $8.242 billion recorded in the previous corresponding period.

Qantas declined to pay an interim dividend.

The airline said as a result of the deterioration in business performance and operating environment it will reduce its full-time equivalent positions by 5,000 by fiscal 2017.

Of the planned job cuts, Qantas says 1500 will come from management and non-operational roles.

The remainder of the losses will come as a result of changes to the fleet and network, the restructure of maintenance operations and the restructure of catering facilities.

Qantas will also extend the wage freeze for executives implemented in December to all Qantas Group employees.

Capital expenditure will also be reduced by $1 billion across fiscal 2014 and 2015, while more than 50 aircraft will be deferred or sold.

Over the next 12 months, Qantas also said it will exit underperforming routes and make aircraft changes on certain routes to better match capacity to demand.

Result is 'unacceptable': Joyce

Chief executive officer Alan Joyce it was clear that the market Qantas operates in has changed, with structural economic shifts exacerbated by an "uneven playing field" in Australian aviation policy.

"This is an unacceptable and unsustainable result," he said.

"Comprehensive action is needed in response.

"Our long-term goal remains the transformation of the Qantas Group for profitable, sustainable growth.

"Over the next three years, we aim to secure our strong Group domestic position and maximise Qantas International’s competitiveness."

Qantas said its operating environment remained challenging and volatile.

"Soft underlying domestic demand is continuing in the seasonally weaker half, with domestic and international yields and loads expected to remain depressed," the national carrier said.

Qantas said it could not offer any profit guidance due to major transformation being undertaken, the high degree of volatility and uncertainty in the competitive environment, global
economic conditions, fuel prices and foreign exchange rates.

Qantas inks $112m Brisbane airport deal

Qantas and Brisbane Airport Corporation (BAC) have reached a commercial agreement covering terminal and runway access at Brisbane Airport, that will see the national carrier sell its 31-year-old lease back to the airport corporation for $112 million.

Qantas holds a 31 year lease, signed in 1987, on the northern end of the Domestic Terminal at Brisbane Airport which is due to expire on December 30, 2018.

In a statement, Qantas said it will retain exclusive use and operational control over much of the northern end of the terminal until the end of 2018 while securing also rights to key infrastructure beyond this period.

For its part, BAC plans to make a significant investment in upgrading and improving facilities and services within the terminal.

Under the agreement, Qantas will receive total cash proceeds of $112 million from BAC.

The airline is believed to be negotiating a similar deal at Melbourne Airport.

Mr Joyce said the agreement was a win-win for both parties which would have significant benefits to Queensland.

"Brisbane Airport is one of the most important airports for Qantas today and increasingly so into the future. This investment is vital to the ongoing growth of aviation in Queensland which helps drive tourism and boost the economy," he said.

"Qantas will continue to offer the most flights of any airline from Brisbane to the most destinations, with the best product and service in the air and on the ground.

"The deal is in line with our strategy of unlocking value in non-core assets."

Qantas awaits government decision

The federal government is considering a short-term debt guarantee, as well as repealing the foreign ownership limits, to ease pressure on the iconic airline.

The coalition will need to secure cross-bench support in the Senate to pass changes to the Qantas Sale Act, given that Labor and the Greens oppose any amendments.

The airline's share price has risen by 16% in the last few weeks, prompting a union call for a regulators investigation into who was profiteering out of the speculation.