Qantas has published details of plans to outsource its ground handling operations at ten airports across Australia, in a bid to save A$100 million (£55 million) annually.

The flag carrier said it had contacted around 2,000 employees to inform them of the move.

In June Qantas outlined plans to cut around 6,000 jobs as a result of the Covid-19 crisis, including at least 1,500 roles in ground operations.

The airline said it had reviewed in-house bids from employees and their representatives, but concluded that “none of these bids” met the carrier’s objectives of:

  • Reducing the overall cost of ground handling operations (as Qantas anticipated it could save approximately $100 million annually, based on pre-Covid levels of flying, through the use of third-party providers)
  • Avoiding large spending on ground handling equipment such as aircraft tugs and baggage loaders ($80 million over five years)
  • Better matching our ground handling services, and their cost, with fluctuating levels of demand

By contrast Qantas said that “a number of external bidders” were able to meet the objectives, “including reducing annual costs by approximately A$103 million”.

The carrier said that transition towards the outsourcing of ground handling operations would begin in the first quarter of 2021.

Qantas also said that its subsidiary Jetstar “has already transitioned its ground handling operations at six airports to external suppliers”.

The airline will consult with affected employees and their representatives, and will be “given support to transition to new jobs outside the business”.

Commenting on the news Qantas domestic and international CEO Andrew David, said:

“This is another tough day for Qantas, particularly for our ground handling teams and their families. We thank every one of them for their professionalism and contribution over the years supporting our customers and operations.

“Unfortunately, Covid has turned aviation upside down. Airlines around the world are having to make dramatic decisions in order to survive and the damage will take years to repair.

“While there has been some good news recently with domestic borders, international travel isn’t expected to return to pre-Covid levels until at least 2024. We have a massive job ahead of us to repay debt and we know our competitors are aggressively cutting costs to emerge leaner.

“The TWU’s in-house bid claimed that significant savings could be made but it failed to outline sufficient practical detail on how this might be achieved, despite us requesting this information multiple times throughout the process. Even with the involvement of a large accounting firm, the bid falls well short of what the specialist external providers were able to come up with.

“We have used these specialist ground handlers at many Australian airports for decades and they’ve proven they can deliver a safe and reliable service more efficiently than it’s currently done in-house. This isn’t a reflection on our people but it is a reflection of economies of scale and the urgent need we have because of Covid to unlock these efficiencies.”