Qantas has completed a review of its heavy aircraft maintenance and engineering operations in Australia and will consolidate heavy maintenance work into Brisbane and Avalon.
The restructure is necessary as there is currently not enough heavy maintenance work required for three separate facilities and the introduction of new technology and modern aircraft means there will be a further 60 per cent reduction in heavy maintenance requirements over the next seven years.
As a result of the restructure, heavy maintenance on Boeing 737 aircraft will move from Tullamarine and be maintained in Brisbane along with B767 aircraft and Airbus A330s. The base at Avalon will continue to maintain Boeing 747s. It will also conduct some work on B737s and B767s, some aircraft reconfiguration work and remain available for one-off maintenace tasks.
Qantas will cease heavy maintenance at Tullamarine by August, however line maintenance will continue to be conducted at the facility employing more than 300 people.
Qantas Chief Executive Officer Alan Joyce said Qantas would continue to be the only major airline in the world to do heavy maintenance at its own facilities in Australia.
“Qantas has an outstanding track record in aircraft maintenance, and our commitment to setting a global standard for safety and quality in airline maintenance will never change,” Mr Joyce said.
“Like the manufacturing industry, aviation maintenance is a labour and capital intensive sector. Our cost base in heavy maintenance is 30 per cent per cent higher than that of our competitors – we must close this gap to secure Qantas’ future viability and success.
“Qantas has invested heavily over the past 10 years in new aircraft that are more advanced, more efficient, attractive to our customers and require less maintenance, less often. But we cannot take advantage of this new generation of aircraft if we continue to do heavy maintenance in the same way we did 10 years ago.
“We have sought to minimise the impact on our people, while delivering the best result for Qantas.”
Qantas undertook a two-month consultation with unions, employees and other stakeholders to discuss the challenges of having three sub-optimal heavy maintenance bases and options the company was considering.
There will be a net reduction of 500 positions as a result of the restructure (Qantas will still employ over 30,000 people in Australia, and around 5,000 in Qantas Engineering).
There will be a reduction of 422 positions at Tullamarine. At Avalon, 113 positions will no longer be required due to the recent retirements of five 747 aircraft this year. There will be 30 new positions available in line maintenance in Melbourne and 5 jobs in Sydney. All Qantas heavy maintenance apprentices will be given the opportunity to finish their apprenticeships with Qantas.
There will also be new job opportunities in Brisbane as a result of 737 heavy maintenance moving there.
Further changes to Avalon are expected as the business continues to modernise.
Where possible, Qantas will offer relocation to Brisbane, including a generous relocation package, or redeployment to other roles within Qantas. There will also be a program of voluntary redundancies.
Qantas will offer significant support packages for affected employees including redundancy packages well in excess of the legislative requirements, career transition, access to skills and training programs and counselling for employees and their families.
Mr Joyce said Qantas was working with the Victorian Government to help affected employees with future employment opportunities.
“Qantas maintenance engineers are highly skilled and have translatable skills that are sought after by other businesses. Dozens of companies in mining and resources, engineering and manufacturing who are looking for highly skilled workers have contacted Qantas seeking to make contact with affected workers,” he said.
Consolidating heavy maintenance and other engineering initiatives will have an annual benefit of $70-$100 million. One off costs associated with the heavy maintenance restructure announced today including redundancies will be approximately $50 million. This takes estimated transformation costs for the second half of FY12 to between $250-$260 million.