Qantas faces Ansett-style extinction

It was failure by management to take on unrealistic unions that brought Ansett down so it looks like Qantas may have learned from that

QANTAS faces Ansett-style extinction unless drastic changes are made to its international business, boss Alan Joyce says. In a stark warning that the airline would take a ruthless approach to overseas operations, Mr Joyce said Qantas could not succeed using its current model and must better use offshore connections and boost its Asian focus.

"Qantas International creates a product and service from an Australian cost base and sells into a global market against international competitors who operate off a far lower cost base," Mr Joyce said. "It is the same problem that has been faced by many other Australian companies in our globalised world. They too have had to change."

Qantas yesterday flagged a $500 million full-year underlying profit, including a payout from Rolls Royce, worth $95 million in settlement over engine problems last November that grounded its A380 fleet.

ACTU secretary Jeff Lawrence said Qantas must remain loyal to its Australian workers as it makes changes to international operations. "Mr Joyce cannot seriously say Qantas proudly calls Australia home at the same time as he speculates about moving the company offshore," Mr Lawrence said. "At the same time, the financial reality he describes to the stock exchange is that of one of the world's most profitable airlines."

Despite enjoying domestic success, the international business arm of Qantas forecasts a $200 million loss.

Mr Joyce said he would unveil plans for changing the company's international operations on August 24. He was committed to growing the number of planes bearing a flying kangaroo that operate to and from Australia. But partnerships with airlines such as British Airways, and forays into Asia, would increase. "We believe that we can leverage joint ventures a lot more than we do today," he said.

Mr Joyce also weighed into the carbon tax debate, signalling new cost pressures would have flow-on effects. He said emissions trading schemes beginning in Europe would result in ticket price increases. "The profitability of these operations is not such that the airlines can digest these costs, so they will be passed on to the consumers," Mr Joyce said. He said protection of the tourism industry was needed under any Australian carbon tax.

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