Australia's Qantas grounds all flights over labor dispute

Canberra to intervene as pilots call move "unprecedented"; Virgin Australia increases services to accommodate stranded Qantas passengers.

October 29, 2011 10:30
2 minute read.
Qantas CEO Alan Joyce at Sydney news conference.

Qantas 311. (photo credit: REUTERS/Daniel Munoz)


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SYDNEY - Australia's Qantas Airways grounded its entire fleet on Saturday over a bitter labor dispute in an unprecedented move that the government said it would ask a labor tribunal to stop.

Qantas, in an announcement that clearly took the government by surprise, said it would lock out all employees from Monday night in a dispute that will leave thousands stranded on one of the country's biggest travel weekends.

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Unions, from pilots to caterers, have taken strike action since September over pay and opposing Qantas plans to cut its soaring costs.

"They are trashing our strategy and our brand. They are deliberately destabilizing the company. Customers are now fleeing from us," Qantas Chief Executive Alan Joyce said in a statement.

"(The unions) are sticking by impossible claims that are not just to do with pay, but also to do with unions trying to dictate how we run our business," said Joyce, who estimated the latest move would cost the airline A$20 million a day.

The strike is the worst dispute the airline has faced since 2008, when industrial action by engineers cost it A$130 million ($133 million), according to local media.

"I am very concerned about Qantas' future. The government is making an urgent application to Fair Work Australia (an industrial tribunal)... to terminate all industrial action at Qantas. This will be aimed at both actions by unions and by Qantas management," Transport Minister Anthony Albanese said.

The tribunal is unlikely to meet until Monday.

Qantas' decision to halt flights comes during one of Australia's busiest travel weekends, with tens thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday, dubbed "the race that stops the nation".

Approximately 70,000 passengers have been affected and more than 600 flights canceled. Many passengers were stranded on aircraft waiting to take off on Saturday when the grounding announcement was made.

"It's unprecedented and really it has hijacked the nation," Barry Jackson of the Australian and International Pilots Association told Sky News.

An extended grounding would benefit domestic rival Virgin Australia and others such as Singapore Airlines , British Airways and Chinese carriers on international routes.

Virgin Australia said it would accommodate Qantas passengers on current services where possible and was looking at adding more services in response to Qantas grounding its fleet over labor dispute.

Qantas said key high value domestic bookings on east coast routes are down by a quarter. November international bookings have fallen nearly 10 percent.

The airline said the financial impact to date has reached A$68 million and the action is costing Qantas approximately A$15 million per week in lost revenue.

It is looking at setting up two new airlines in Asia. It plans to cut 1,000 jobs and order $9 billion of new Airbus aircraft as part of a make over to salvage the loss making international business.

Aircraft currently in the air would complete the sectors they are operating. However, there will be no further Qantas domestic or international departures anywhere in the world, it said.

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