After declining sales and profits threaten the stability of Qantas International, firings from the top were priority in moving the airline giant forward. In fact, Qantas – Spirit of Australia (as it refers to itself), has dismissed over 500 employees and has decided to separate its international operations from its domestic operations.
In August of 2011, Qantas exposed a $200 million trouncing of profits brought on by Qantas International. Qantas had been utilising Qantas Domestic to recoup some of the loss. However, Qantas Domestic has been taking on water itself with rising competition from Virgin Australia. Needless to say, investors were mortified. Group CEO, Alan Joyce, spoke forthright about the state of their business:
“Qantas Domestic and Qantas International face very different situations…” “Qantas International, a great airline with a rich history, is loss-making and does not deliver sustainable returns… ” “The restructure I announce today advances this essential program of change. It recognises that the Qantas Group is a true portfolio business.
Qantas is currently staging a five year transformation plan. The airline company will begin to split its executive team to oversee separate operations under its Qantas umbrella.
Restructuring maneuvers have begun, with the sacking of Jetstar Group Chief Executive, Bruce Buchanan. He will vacate his position within the next six months, and will be replaced by Jayne Hrdlicka, a Group Executive over Strategy and Technology. Rob Gurney, Group Executive of Commercial and Freight, has also been let go after 14 years of service.
Lyell Strambi, Qantas Airlines’ Operations Group Executive, will be heading Qantas Domestic while Simon Hickey, Qantas’ Frequent Flyer Chief Executive has been promoted to oversee Qantas International. Lesley Grant, Group Executive of International Strategy, will take Hickey’s vacated position.
Despite a massive loss in profits and reorganisation, Joyce is confident that the transition will not affect travellers and that changes to their struggling international operations will prove to be positive business for its investors and passengers:
“… we are committed to turning it around through the five-year strategy we announced last year, based on flying to global gateways, deeper alliances, smart investment in product and disciplined capital management.”