Qantas shutdown: CEO Alan Joyce's statement in full

By David Flynn, October 29 2011

In an urgently-called press conference today, Qantas' CEO Alan Joyce delivered the following statement, which Australian Business Traveller is bringing you in full. For more, see our full coverage of the Qantas shutdown.

(And if you're stranded and couldn't care less about Alan Joyce's speech compared to getting home, here's what Qantas will cover in terms of compensation.)

Speech by Qantas CEO Alan Joyce

A crisis is unfolding within Qantas.

Industrial action directed by the leadership of three unions - the Australian Licenced Aircraft Engineers Association (ALAEA) representing the licensed engineers, the Transport Workers Union (TWU) representing ramp, baggage and catering staff, and the Australian and International Pilots Association (AIPA) representing the long-haul pilots – is aimed at applying so much pressure on Qantas, so much pressure on our customers, and so much pressure on Australian business, that we will give in to their demands.

In 15 months Qantas has reached agreement with more than 10,000 employees represented by four unions on five Enterprise Agreements – or one-third of the Qantas workforce.

Over the same period we have been doing all we can to reach agreement with the ALAEA and AIPA and more recently with the TWU. What makes these union negotiations different? Two things.

First, these three 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.

The pilots’ union wants to force us to pay Jetstar pilots on codeshare flights the same high rates that they get at Qantas.

This would set a wages precedent that would soon put an end to Jetstar and slash low-cost travel in Australia.

Our only alternative would be to remove Qantas codesharing from Jetstar which would have the effect of making some key Qantas routes uneconomic.

The licensed engineers want to bind Qantas maintenance to the past; to thumb their nose at world’s best-practice regulations, including those endorsed by Australia’s Civil Aviation Safety Authority; and continue with outdated work practices on new generation aircraft.

The TWU was offered an exceptional deal but is sticking to its completely unrealistic claim that would prevent us from the sensible use of contractors.

These are impossible demands. We cannot agree to them because they could ultimately put the Qantas Group at risk.

The second thing that makes these unions different is that they are running utterly destructive industrial campaigns against Qantas and our customers, hurting all our employees and undermining Australian business.

The situation is unsustainable.

• 70,000 affected passengers
• Over 600 flights cancelled
• 7 grounded aircraft
• Nearly $70 million in damage
• And $15 million in damage for every week that goes by.

The unions’ industrial campaigns are designed to scare away customers. It has become impossible for Qantas to serve our third-party maintenance clients.

They are trashing our strategy and our brand. They are deliberately destabilising the company. And there is no end in sight.

Yesterday two unions declared their intention to escalate industrial action further and over an extended period. As one said earlier they want: “to bake Qantas slowly”.

The pilots’ union has also said they are considering escalating their industrial campaign.

They talk about job security, but the unions are on a path that would diminish the job security of their own members.

Customers are now fleeing from us. Key high value domestic bookings on east coast routes are down by 25% on the same period last year. That’s the most lucrative part of our flying business and it is bleeding badly.

International bookings have also fallen, with November bookings nearly 10% down on where we expected them to be – when Qantas International is already making significant losses.

Our customer research shows an alarming increase in people who intend NOT to fly with Qantas.

In our domestic business that number has surged from a normal 5% to 20%. The intention not to fly with Qantas internationally has surged to nearly 30%.

Virgin Australia is the main beneficiary of this campaign and has announced capacity increases. The great irony is that it pays less, is less unionised and does its heavy maintenance offshore. Yet there is no union pressure on Virgin.

This is a crisis for Qantas.

If this action continues as the unions have promised, we will have no choice but to close down Qantas part by part. It goes without saying that this would have very grave consequences for jobs.

Killing Qantas slowly would be a tragedy for Qantas and our employees. But it would also have a terrible domino effect right across Australia, affecting businesses large and small, tourism, freight and families.

We have got to achieve a resolution to this crisis. We have got to bring this to an end. So I have no option but to force the issue.

I have to activate the one form of protected industrial action that is available to me to bring home to the unions the seriousness of their actions, and to get them to forge sensible deals with us.

I am using the only effective avenue at my disposal to bring about peace and certainty.

In response to the unions’ industrial action, I announce that under the provisions of the Fair Work Act Qantas will lock out all those employees who will be covered by the agreements currently being negotiated with the ALAEA, the TWU and AIPA. I have informed the Government of this.

The only exception to this is that no employee working overseas will be locked out and all staff overseas will continue to be paid.

The lock-out will commence from 8pm on Monday night Sydney local time and will continue until further notice.

Because the pilots, ramp, baggage and catering staff and licensed engineers are essential to the running of the airline, the lock-out makes it necessary for us to ground the fleet. However, I cannot wait until Monday to do so.

This is a very tense environment. Individual reactions to this lock-out decision may be unpredictable. We are always conservative in our approach.

For this reason, as a precautionary measure, we have decided to ground the Qantas international and domestic fleet immediately.

I repeat, we are grounding the Qantas fleet now.

Obviously, those flights that are currently in the air will complete their scheduled sectors.

However as from now there will be no further Qantas domestic or international departures anywhere in the world.

Jetstar and QantasLink will continue to operate. Express Freighters Australia and Atlas Freighters will continue flying. JetConnect will also continue to operate Qantas services across the Tasman.

We are locking out until the unions withdraw their extreme claims and reach an agreement with us.

The great majority of our staff have played no part in this damaging industrial campaign. On the contrary, they have stepped up magnificently to try and minimise the union-inflicted damage.

Until the lock-out commences at 8pm on Monday, all employees are required at work and will be paid.

Once the lock-out commences:

(1) those employees who are locked out will not be required at work and will not be paid; and (2) All other employees are required at work and will be paid.

We will be talking to those employees, their managers and their union representatives about how we best manage the impacts of this situation.

I urge the members of the ALAEA, TWU and AIPA to consider their own interests and tell their leaders they want to reach reasonable and fair agreements that will be good for them and for Qantas.

I want to say how sorry I am that this course of action has become necessary. We will be doing all we can to care for our customers.

For those who are mid-journey, we will assist with accommodation and endeavour to help with alternate flights, and any other support we are able to give.

We will provide a full refund to any customer who chooses to cancel their trip because their flight has been directly affected by the grounding of our fleet, and extend full rebooking flexibility for anyone wishing to defer their travel.

Our customer service staff will have my full support to assist our customers in any way they can.

We will have continuous updates on qantas.com and that will be the best source of information. We will also be using our Facebook and twitter feeds to keep customers updated.

This course of action has been forced upon us by the extreme and damaging course chosen by the leaders of three unions.

It is now over to them. The ball is in their court.

They must decide just how badly they want to hurt Qantas, their members, our other employees, and the travelling public of Australia in pursuit of their destructive aims.

For more details, see our full coverage of the Qantas shutdown.