Qantas mum on talk of mass layoffs

SYDNEY - Qantas Airways says it has contingency plans to cope with a travel downturn in the event of war in Iraq, but would not confirm reports that it plans to lay off 2500 staff.

The Sydney Morning Herald said Qantas estimated that passenger numbers would fall 15-20 per cent at the outbreak of war.

International bookings were already beginning to slow.

"Qantas has devised a contingency plan should Iraq be invaded that will result in the airline removing up to 2500 staff from its workforce in order to minimise the impact on profits," the newspaper said in an unsourced report.

The airline said it was prepared for a variety of scenarios.

Qantas is due to report its first-half results today, with analysts tipping a net profit of about A$332 million ($356 million), more than double last year's A$153.5 million when its profit fell 42 per cent after the September 11 attacks.

Unions said the airline had not sought discussions with workers about layoffs, and deemed the mooted cuts a cynical move to boost its share price.

"The thing we say to Qantas is that they've got plenty of alternatives," said Linda White, assistant national secretary of the Australian Services Union (ASU). "The analysis post the Gulf War shows there's a fairly strong bounceback.

"I think this is all to do with tomorrow - there's nothing like a bounceback in the share price."

Qantas, which has about 30,000 staff, managed to redirect capacity quickly after the September 11 attacks, which were followed just a day later by the collapse of second-ranked domestic carrier Ansett Australia.

But this time around, it would not have the same buffer.

Qantas has already instructed staff to take accrued leave to remove extra costs from its financial results.

Analysts estimate that passenger volumes could drop 22 per cent when the first shots are fired, but then recover 5 to 7 per cent each subsequent month.

But even if the present stand-off continued, sustained high oil prices would soon start to hurt the airline, which has low exposure to fuel costs in 2002/03 but must take out more hedging in May.

* Meanwhile, Air New Zealand's Australian staff say they will strike next week in frustration at the lack of progress made in pay negotiations.

The industrial action by the airline's Australian workforce, comprising about 90 check-in staff, flight supervisors and sales representatives, will take the form of each staff member missing half a shift next Tuesday and again on Wednesday.

The ASU's Linda White predicted the stoppage would disrupt several Air NZ flights, a claim denied by the airline's Australian spokesman.

- AGENCIES