A Senate inquiry has been told a decision by Qantas to slash thousands of jobs is illogical and appears to have been financially and politically motivated.
(Transcript from World News Radio)
The inquiry has been told the airline would have known for some time it was in trouble and long-term planning could have prevented major job losses.
The inquiry is considering whether Qantas should be offered a cash injection or debt guarantee.
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Qantas has announced it's cutting 5000 jobs, freezing wages, retiring old planes, slashing capital spending and ceasing some routes over three years in a bid to save two billion dollars.
It made the announcement after posting a $252-million half year loss.
The federal government has rejected calls to provide a debt guarantee to Qantas but has introduced legislation that would lift foreign ownership restrictions on the national carrier.
The Qantas Sale Act limits foreign investment in the airline at 49 per cent and a single overseas investor at 25 per cent.
Ian Thomas, managing consultant of CAPA Consulting - which provides aviation advice to the federal and state governments - told the Senate inquiry the airline's radical action was unnecessary.
Mr Thomas says it is hard to understand why Qantas suddenly needed to cut 5000 jobs, rather than making smaller cuts over a period of time.
"You'd have to think that to reach this stage there was something wrong with the way management was handling the situation. It could have been something that might have been phased down over a period, or made adjustments along the way. To announce five thousand jobs going is certainly dramatic to say the least. In Qantas case it would have been something they were well aware of and what I am suggesting is that if they had job losses required then they would have made adjustments over time. It wouldn't have been some sort of cataclysmic adjustment."
Ian Thomas says he has been observing Qantas for 20 years and does not think there is an immediate role for government.
Transport Workers Union national secretary Tony Sheldon has told the inquiry the management of the airline is highly questionable.
He says, in light of recent comments by Qantas that it was going to increase it's number of domestic flights to compete with Virgin, it appears the cuts were announced for financial and political motives.
"The logic always says that you have to in those sort of circumstances employ more people to get th work done. It again highlights the vagaries of the decisions they're making and one could argue and I would certainly say a consideration for me was when the company made the decision was it directed at getting a market response regardless of devastating five thousand families and was it trying to get a government response regardless of devastating five thousand families. They sacrificed members of the Australian community to try to make a political point.
Chief Executive of Qantas, Alan Joyce has defended his restructure.
Mr Joyce says the airline's future remains under threat because it's operating under ownership restrictions that its competitor Virgin airlines is not.
He says removing the foreign ownership cap and giving Qantas the same access to foreign capital as Virgin will help ensure its future.
Mr Joyce has told the inquiry that airlines across the world are having to change the way they operate to remain viable.
He says Qantas is no different.
"I want this business to survive and I know making the tough decisions not a lot of people support. But it is the necessary thing to do to make sure we turn the business around, it will turn the business back into profit and I want to see Qantas around for the next 90 years because it is a national icon. It is a business that is very precious to this country. And it's the easiest thing for management to do is not to do anything. But this business needs to change to survive. It will change to survive and it will thrive in the future once this change program is driven through."
Mr Joyce says he can't guarantee there won't be more job losses even if the Qantas sales act is changed as it may be necessary to make further reforms to adapt to changes in the airline industry.
The federal government's bill to remove the foreign ownership limits on Qantas has passed though the House of Representatives and now moves to the Senate.
The bill looks doomed to certain failure, with Labor and the Greens opposed to allowing any changes to Qantas ownership rules.
