SYDNEY: Australia's Qantas Airways has grounded two more planes due to an escalating industrial dispute which threatens to disrupt thousands of domestic flights leading up to the crucial Christmas period.
Qantas warned on Tuesday of a maintenance backlog as aircraft engineers threatened to continue work bans until the end of the year, sending its shares down more than 5 percent.
"If this overtime ban continues, we will be grounding even more aircraft," Qantas chief executive Alan Joyce said.
Two Boeing 767 aircraft would be grounded on Oct. 24 in a move expected to result in the cancellation of a further 80 domestic flights over the next month, Qantas said.
The cancellations are in addition to five aircraft already grounded by Qantas, which operates a total fleet of more than 250 aircraft. Qantas has cancelled about 500 flights, removing 88,000 seats from sale over the next month, due to the dispute.
Qantas has been hit by a string of strikes since September and faces a prolonged dispute involving baggage handlers, ground staff, engineers and pilots over pay and conditions and plans to cut domestic jobs as it looks to expand in Asia.
Disruptions have mainly hit domestic flights in Australia where the carrier makes most of its profits, particularly from its low-cost offshoot Jetstar and frequent flyer programme.
Qantas' international business is losing A$200 million ($200 million) a year but is key to the dispute because unions oppose the airline's plans to cut local jobs in favour of expanding in Asia.
SHARES TUMBLE
Qantas shares extended falls in a weak overall market to trade down 5.5 percent following the announcement.
The stock, which hit an all-time low of A$1.35 earlier this month, recovered slightly to trade down 4.2 percent to A$1.48 at 0416 GMT.
Investors Mutual portfolio manager Jason Teh said the industrial action was hitting the shares.
"Union issues are always an issue, sometimes it is in the background and sometimes it escalates. It is getting a good deal of air time at the moment but in the next six months it may go down again," he said.
Bank of America Merrill Lynch analysts previously estimated the grounding of five planes would result in A$13 million of lost revenue per month and equalled 3 percent of expected October capacity.
Joyce said the Australian Licenced Engineers Association (ALAEA) was continuing a ban on overtime work which had been in place since September, causing a backlog of maintenance. The union has written to Qantas saying it would remain in force until Christmas.
The government last week warned Qantas and unions it could intervene to force an end to the dispute although Prime Minister Julia Gillard appeared to soften her stance on Friday, telling the two sides to resolve their issues.
Earlier this month, the industrial fight with unions turned more heated, with racist threatening letters sent to Qantas' Irish chief Joyce and other management. .
Comments
Comments are closed for this article.