Qantas (QF, Sydney Kingsford Smith) has announced the outsourcing of 2,000 ground staff jobs at ten airports across Australia in a move to cut costs as it faces a financial hit from the global COVID-19 pandemic.

The airline in a statement said it aimed to save AUD100 million Australian dollars (USD73.7 million) annually (based on pre-COVID levels of flying) through the use of third-party ground handlers. Avoiding large spending on ground handling equipment such as aircraft tugs and baggage loaders would save another AUD80 million (USD59 million) over five years. The move would also allow it to better match ground handling services and their cost with fluctuating demand levels due to COVID-19.

The decision affects baggage handlers, ramp workers, and cabin cleaners at Sydney Kingsford Smith, Melbourne Tullamarine, Brisbane Int'l, Perth Int'l, Adelaide, Darwin, Cairns, Townsville, Alice Springs, and Canberra. Affected employees would be entitled to a redundancy package and given support to transition to new jobs outside the company.

The announcement brings job losses across the Group as a result of the COVID crisis to around 8,500 of Qantas' 29,000 pre-COVID workforce. A decision was also expected before year-end on the outsourcing of crew bus services in-and-around Sydney Airport, potentially affecting a further 50 employees.

Qantas in August invited bids from external specialist ground handlers and in-house bids from employees and their representatives. However, bids received from the Transport Workers Union (TWU) and some airport teams were unsuccessful as they did not meet the cost-saving objectives, the Group said.

Instead, a number of external bidders, some of whom already provide ground-handling services at 55 airports across Australia, were able to match all requirements, including reducing annual costs by AUD103 million (USD76 million). Once contracts had been finalised, the preferred (as yet unnamed) bidders would take over ground-handling services in 1Q21.

Subsidiary Jetstar Airways (JQ, Melbourne Tullamarine) in August already announced its decision to outsource its ground handling operations at six airports.

Qantas Group posted an AUD2.7 billion (USD1.9 billion) loss in FY2021 due to COVID-19 and associated border restrictions. The airline expects further significant losses in FY2021 as it expects a further AUD10 billion (USD7.3 billion) drop in revenue. The Group said it had incurred more than USD1.5 billion in additional debt since the start of the pandemic.

Qantas Domestic and International Chief Executive Officer Andrew David said: “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.”

Meanwhile, the Group dismissed TWU claims that the outsourced services would be unsafe; that the in-house bid process had been a sham; and that the process was really about lowering workers’ wages and conditions. The union had also charged that Qantas should pay back taxpayers money it had received as part of the government’s JobKeeper scheme to save jobs. Qantas said it had fully complied with the scheme and paying back the money would mean clawing it back from employees, which made no sense.