(Transcript from World News Radio)
5,000 Australians are set to lose their jobs after Qantas posted a $235-million half-yearly loss.
Qantas says it made the decision to slash staff irrespective of any potential federal government assistance.
As Thea Cowie reports, it appears increasingly likely that assistance will come in the form of changes to the Qantas Sale Act.
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Qantas CEO Alan Joyce says the airline had no option but to act immediately.
"This performance by our airlines is unacceptable and the current position is unsustainable. It reflects a substantial change in our circumstances. Our response will be unprecidented in scope and depth. And it should be clearly understood that we are taking these actions, we must take these actions, irrespective of any decision which the Government may or may not take in relation to levelling the playing field."
The airline says the 5,000 full-time equivalent job cuts are part of the company's bid to cut $2-billion in costs over the next three years.
Of the planned job cuts, 1,500 will come from management and other roles classified as 'non-operational'.
The rest will come as a result of changes to the fleet and network, and the restructure of maintenance operations and catering facilities.
Wage increases and bonuses will be put on hold, and Qantas will stop flying under-performing international routes.
The airline will also reduce its fleet, by selling some aircraft, and delaying orders for others.
Alan Joyce blames the airline's problems on a range of factors, including what he terms an uneven playing field with Virgin, which has the backing of foreign airlines - Etihad, Singapore Airlines and Air New Zealand.
"For the past five years Australia has been hit by a giant wave of new airline seats from foreign carriers. Domestic capacity has also surged. The capacity growth in both our international and domestic markets is led by State-owned airlines. Many have far lower labour and other costs. High fuel prices and high currency movements have also made the problem worse."
But Independent Senator Nick Xenophon says the blame lies squarely on the Qantas board and he's calling for a judicial inquiry.
"What Alan Joyce has unveiled today is nothing short of a scandal. One of the world's great airlines, a national icon, has been brought to its knees because of the incompetence of Alan Joyce and his board, a failed strategy in Asia with Jetstar and I suggest to you that the only way to get to the truth of what has occured is for there to be an independent judicial inquiry with forensic accounting to get to the truth of this. The fact that Jetstar International has gone from a 128-million-dollar profit 6-months ago to a 16-million dollar loss now seems very strange."
Senator Xenophon says he is not accusing Qantas of breaking any accounting laws, but those laws should be reviewed when it comes to profit-shifting between entities.
There have long been calls for the Qantas Sale Act to be reviewed.
Current legislation caps foreign ownership of the airline at 49 per cent.
Foreign airlines can own no more than 35 per cent, or any other single foreign investor could have no more than 25 per cent.
Transport Minister Warren Truss has indicated the government is drafting changes to the Act.
Prime Minister Tony Abbott has told parliament that's the most prudent option.
"We are determined to do what we can for Qantas, consistent with the responsible economic management. That essentially means that we should ensure that Qantas can compete on a level playing field. We want to ensure that Qantas is not competing against its rivals with a ball and chain around its leg."
But Independent MP Bob Katter says any loosening of foreign ownership laws could reduce safety.
"They don't understand that if you move to a free skies policy then you will be paying people $30,000 a year to fix your aeroplanes. And people who get paid $30,000 a year aren't going to fix your aeroplanes the way you want them fixed. And that's the reason why Qantas has never had an accident whereas every other airline has fallen out of the sky."
Transport Workers' Union National Secretary Tony Sheldon says the Sale Act is key to protecting Australia's national interests.
"Do we want Qantas to be to not be the national icon anymore? We've seen quite clearly the federal government has announced its desire to get rid of the Qantas Sale Act, to get rid of Australian jobs, rid of committments within this country. That's a the government working against the national interest. It is a government working against Australian families and it is a government only bolstering the executives in this company."
The federal opposition has indicated it may back amendments to the Sale Act, provided the airline remains majority Australian-owned.
But Opposition Leader Bill Shorten says changing legislation should not be the priority.
Instead he's calling on the government to immediately provide Qantas with a guaranteed stand-by line of credit.
"This is a matter of national aviation policy, tens-of-thousands of jobs. It is time for the Abbott government - they have teased everyone, teased the media, they've teased the markets, they've teased customers, they've teased - well in fact they've done worse to Qantas workers, they've left them in a state of insecurity. It is time to be upfront. Are you going to help or are you just going to engage in politics?"
Prime Minister Tony Abbott says if the government were to provide a debt guarantee to Qantas, it would have to make it available to all businesses.
The debt guarantee proposal is also controversial with other airlines and the Australians Greens.
Regional Express Airlines deputy chairman John Sharp has told the ABC giving Qantas a guarantee would be unfair.
"If it were to be given to Qantas, and Qantas only, it would be a disaster for REX. It could threaten our services to regional communities because we compete against Qantas. If I was Warren Truss and Joe Hockey, I would probably say to Qantas, 'I will work to level the playing field between you and Virgin by lifting the foreign ownership cap and get your house in order. You need to make the necessary management changes to make your airline a lean, mean machine.'".
Qantas first announced in December that a thousand jobs would go and they're included in the latest announcement.
The news comes as Air New Zealand posted a record profit increase, up 40-per cent on the first half of the previous financial year.
The airline is majority owned by the New Zealand government.
