Qantas Engineering - Questions and Answers

Sydney, 09 March 2006

The following Question and Answers provide additional information on Qantas' decision to keep heavy maintenance in Australia.

What is behind the engineering review?

Qantas, with the assistance of its people, has undergone significant transformation in recent years, including engineering.

However, the unprecedented upheavals in global aviation in more recent years have seen much more accelerated outsourcing of engineering and maintenance by major airlines.

This has resulted in facilities being established in countries with significant scale and immediate cost advantage against 'in-house' operations like Qantas of 15 to 20 per cent.

This is not a position we can sustain without major change.

The high cost of fuel and increasingly competitive environment mean Qantas must continue to transform its business and move to a lower cost base in all areas of its business if it to prosper and grow.

Every area of Qantas Engineering is being reviewed.

With regard to wide body heavy maintenance, the review highlighted two viable options for meeting this challenge - move the work offshore or restructure our operations in Australia.

We chose to restructure in Australia - a decision that will require the closure of Qantas' Sydney heavy maintenance operations.

Why close down Sydney?

We cannot achieve the efficiencies we need if we continue to operate from three wide body heavy maintenance facilities (Sydney, Brisbane and Avalon).

It is not possible to remain in Sydney because there are severe space constraints, even for line and base maintenance. In fact, we have already had to move many engineering and maintenance functions out of Sydney because of space problems.

At Avalon, we have the space and the required skills and experience to do this work.

When will the changeover happen?

The Sydney Heavy Maintenance operation will start winding down immediately, and close on 31 May 2006. All of our Boeing 747 work will be transferred to Avalon by this date.

What will happen with A380 heavy maintenance?

Qantas Engineering is in the process of developing base maintenance facilities for the A380 in Sydney, but it is unlikely that A380 heavy maintenance will be undertaken in Australia.

Given the small A380 fleet, in the short to medium term, airlines will most likely look to form joint ventures or use independent providers.

What about the planned industrial action?

The Australian Workers Union and Australian Metal Workers Union have proposed work-to-rule industrial action over the next three months in relation to their EBA negotiations. We are not expecting any impact on our business or any inconvenience to our customers are a result of this proposed action.

If the situation changes, however, we have contingency plans to minimise any disruptions.

Will there be any effect on safety standards?

Qantas would never put safety at risk, regardless of where our engineering work is carried out.

Qantas has been using the Avalon operation for maintenance work since 1997.

All work undertaken at Avalon has been done, and will continue to be done, in accordance with regulatory requirements and with Qantas standards and specifications.

How many staff will lose their jobs?

We expect the net effect to be around 340.

There will still be more than 2,900 people employed in engineering in Sydney.

Our first step will be to call for expressions of interest, although it is inevitable there will be some compulsory redundancies.

We will be doing everything possible to mitigate the effects on our staff including offering redeployment to other maintenance areas - for example, there are currently job opportunities for some Sydney Heavy Maintenance staff in Brisbane.

What will happen to Sydney-based apprentices?

All apprentices will be retained and given the opportunity to finish their training. We will be holding positions in the Qantas Group for apprentices in Sydney heavy maintenance graduating between now and June.

We continue to be committed to an apprenticeship program as a way to ensure a skills base into the future.

What assistance is being giving to staff?

Comprehensive information packs have been given to each employee in Sydney.

The communication and transition program we have in place for staff includes on-site counsellors, outplacement programs, and specialist advice on financial planning, careers, retirement and business seminars.

Issued by Qantas Corporate Communication (Q3400A)