Qantas suppliers hit by $2bn cost cutting endeavour

 

Airline won’t rule out IT job cuts.

Qantas will review how much it spends with its top 100 suppliers as part of an “accelerated cost reduction program” which could see a number of IT workers lose their jobs.

The national airline today revealed it would cut at least 1000 jobs over the next year after announcing an expected pre-tax loss of up to $300 million for the six months to 31 December  - a result it attributed to “seriously deteriorating” trading conditions. 

It will now attempt to achieve cost savings of $2 billion over the next three years across all areas of the business by freezing pay and abolishing bonuses for executives in FY2014, cutting the pay of CEO Alan Joyce and the Qantas board, sacking at least 1000 workers over the next year, and reviewing its spending with its top 100 suppliers.

Qantas relies on outsourcers for as much as 80 percent of its IT - partnerships which chief information officer Paul Jones last year told iTnews had saved the airline around $30 million in costs

Qantas partners with the likes of IBM for its IT infrastructure, Amadeus for passenger management software, Fujitsu for end-user computing and Tata Consulting Services and Mahindra Satyam for application management.

The airline’s IT staff as of last year sat ‘stably’ at 250, Jones told iTnews. A Qantas spokesperson today could not confirm the IT team would not be affected under the new staff reduction program.

“The group will also launch an immediate review to identify structural changes that could potentially unlock sources of capital and value for shareholders. No options will be excluded from the review,” the airline said in a statement to the ASX.

The airline also last year outlined 1000 job cuts as part of a five-year global strategy which included establishing Asian joint ventures. 

The company’s share price fell more than 14 percent to $1.02 following today’s announcement.

Qantas has spent recent weeks pleading with the federal government to provide financial assistance as the airline struggles with “immense challenges” including weak demand, high fuel costs and a price war with local rival Virgin Australia which is threatening its Australian market share. 

“We will do whatever we need to do to secure the Qantas Group’s future,” CEO Joyce said in a statement.

“The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia. "

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Qantas suppliers hit by $2bn cost cutting endeavour
 
 
 
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