/ 30 October 2011

Qantas ordered to halt dispute after fleet grounded

An Australian labour tribunal ordered Qantas Airways and its unions to immediately terminate all industrial action and return to the negotiating table to resolve a dispute after the airline grounded its entire global fleet.

Fair Work Australia, an independent industrial umpire, was appointed by the government on Saturday after Qantas took the unprecedented step of grounding 108 aircraft, causing the cancellation of almost 500 flights and affecting nearly 70 000 passengers by Sunday afternoon.

Qantas took the drastic action to bring to a head a prolonged, bitter battle with its unions over pay and working conditions and a strategy to set up two new airlines in Asia.

The national carrier, which made a pre-tax profit of $552-million in the year to June 30, plans to cut 1 000 jobs and order $9-billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The tribunal said Qantas and the unions now have 21 days to negotiate a settlement before binding arbitration may be imposed. Qantas had wanted industrial action terminated, while unions had sought a temporary suspension.

“We are pleased that after 24 hours of turmoil that common sense will be restored to the aviation and tourism sectors of Australia,” Assistant Treasurer Bill Shorten said in televised remarks.

Union representatives said they would work with Qantas to resume flights as soon as possible.

The grounding had angered stranded passengers and the government, overshadowing Prime Minister Julia Gillard’s hosting of a summit of Commonwealth leaders in the western city of Perth.

Earlier, Gillard told reporters she had convened the crisis hearing because of concerns about damage to the economy and had called on the airline and union to quickly end the industrial action.

Almost 20 leaders had been booked to fly out with Qantas, but Gillard said most had made alternate flight plans.

‘Unbelievable decision’
Qantas chief executive Alan Joyce estimated the “bold decision, an unbelievable decision” to ground the fleet would cost the company A$20-million ($21.4-million) a day.

The airline said it would be at least midday on Monday before flights resumed. It would issue an update later on Monday.

“We will be getting our aircraft back up in the air as soon as we possibly can,” Joyce said in a statement after the ruling.

“It could be as early as Monday afternoon on a limited schedule with the approval of the regulator,” he said.

“I apologise to all Qantas passengers that have been impacted by the industrial action by unions over the past few months and in particular the past few days.”

The panel deliberated for more than 12 hours as lawyers for the airline, union and government questioned executives and advisers and made submissions.

Qantas’ shares, which have underperformed the wider market, could fall further after the escalation of hostilities with the unions.

“If they are not on a trading halt I would expect them to come under a bit of downward pressure, because it is going to have a financial impact and there has been a lot of talk about damage to the brand,” said Cameron Peacock, market analyst at IG Markets.

Bringing the matter to a head, he said, was understandable.

“It’s obviously proved unpopular with people stranded around the globe but in the long-run, and [Joyce] is looking beyond the next week, it’s probably the right thing to do.”

Shares in Qantas have fallen almost 40% this year, underperforming an 8% fall in the benchmark index .

Qantas said a series of rolling stoppages by unions had cost the airline almost A$70-million since September and driven down bookings, threatening its survival.

The Qantas dispute is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labour markets and a boom in resource prices.

It had threatened to become the most significant disruption to Australian aviation since a six-month 1989 dispute that had a major impact on tourism and other business sectors. Industrial action by engineers cost Qantas around A$130-million in 2008.

Tony Sheldon of the Transport Workers’ Union had described Qantas’ announcement on Saturday to ground its fleet and lock out all employees as cynical and pre-planned. Qantas made the move a day after holding a shareholders’ meeting.

“It’s a company strategy that shareholders should have been told about, that the Australian community should have been told about, not ambushed in the dead of night,” he said.

Massive disruptions
Qantas check-in desks across Australia were largely empty on Sunday. The airline, which usually flies more than 60 000 people a day, is paying for accommodation and expenses for stranded travellers and putting some on alternative flights.

Australian rival Virgin Australia said earlier it was adding 3 000 seats on its domestic network on Monday, in addition to 3 500 seats on Sunday.

Virgin Australia’s airline partners Abu Dhabi’s Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas’ decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

“To resolve this at the expense of paying customers on one of the biggest flying days in Australia is quite frankly … bizarre, unwarranted and unfair to the loyal customers that Australia has,” a businessman, who gave his name only as Barry, told Sky TV at Melbourne airport.

This weekend is one of Australia’s busiest for travel, with tens of thousands travelling to the hugely popular Melbourne Cup horse race on Tuesday, dubbed “the race that stops the nation”. – Reuters