Fighting talk from Qantas as it lays out a bleak picture and accelerates cost cutting to stabilise the business in the face of the toughest challenges it has faced. Marketers could be amongst the 1,000 job losses outlined in a $2bn cost-cutting program.
Qantas plans to review every aspect of the business, including its marketing and brand division, to cut costs and achieve the efficiencies over three years. It will look to overhaul how the business is structured and what it invests in to “unlock” sources of capital.
It is also reviewing spending with its top 100 suppliers, one of which is likely to include Qantas Loyalty, which provides the airlines direct marketing function alongside its loyalty programme.
The airline says it will post a pre-tax loss of between $250 and $300 million for the second half of this year, following further deterioration of market conditions.
Qantas has also put in place a pay freeze, the CEO and board members will take a pay cut and there will be no bonuses in 2014.
Alan Joyce, Qantas CEO, says the Australian market has become an “unfair playing field” hitting out at Virgin Australia's financial backing from foreign government owned airlines and slamming its strategy as “designed to weaken Qantas” in the domestic market.
The strategic review comes just a day after Richard Branson, Virgin CEO, slammed Qantas management in his UK blog. Branson suggested Qantas would not be in a “financial mess” if the airline was better managed and offered a better service.
Joyce said the board will do “whatever we need to do” to secure the stable future of the airline adding that the difficult operating environment the airline faces “demand urgent action”.
He said: “The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia.
“The uneven playing field in Australian aviation is being tilted further. We cannot and we will not stand still in these extraordinary circumstances. As we take these urgent actions, we will continue to take the fight to the competition and strengthen our leading position in the domestic market, and we will continue the turnaround of Qantas International.”
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