Qantas Restructures Catering

Sydney, 21 June 2006

Qantas said today that it would retain its catering business and substantially restructure the operation.

Qantas Executive General Manager Associated Businesses, Mr Grant Fenn, said the decision followed a review of operations that had included major restructuring opportunities and a potential sale of the business.

He said the prices that were available from the market did not represent good value when compared with Qantas' restructure plans.

"The first stage of the restructure will provide a 45 per cent increase on current Earnings Before Interest and Tax (EBIT) forecasts of $34 million.

"Initially, the restructure will focus on our two Sydney catering facilities - QFCL Sydney, located on our Sydney Jetbase, and Caterair Sydney, located nearby at Mascot.

"The greatest volume of our catering work is carried out at these two centres and each currently services both Qantas and client airlines.

"Over the next nine months, we will reorganise the work by concentrating all client airline catering services in one facility and all the Qantas catering services in the other.

"This will enable us to operate more efficiently by streamlining processes at the dedicated facilities."

Mr Fenn said some positions would be affected by the change.

"We will manage the impact on our people as far as possible through redeployment, attrition and by reducing casual hours. As many as 30 redundancies may be required, but we expect these will all be achieved through expressions of interest.

"We do not expect these changes to impact on product and service delivery during the transition process."

Mr Fenn said that the restructure of Qantas' five other flight catering centres - in Melbourne, Brisbane, Perth, Adelaide and Cairns - would also commence immediately.

"This will involve an extensive review of the supply chain - improving product engineering and demand forecasting, reducing inventory lines, leveraging our buying power and improving our use of food production technologies," he said.

Mr Fenn said the Qantas Group's Brisbane-based Snap Fresh business would not be affected by the changes.

Issued by Qantas Corporate Communication (3444)