Qantas Enters Binding Arbitration with Employees

 - November 22, 2011, 10:06 AM
Long-haul pilots, including those flying Qantas's Airbus A380s, remain deadlocked with management over job "outsourcing."

Three weeks of fruitless negotiations between Qantas and three of its employee unions have forced the government’s workplace labor tribunal to arbitrate new labor agreements. The Australian flag carrier has warned that the dispute could result in a dip in its profits for the last six months of 2011 of up to 66 percent.

A series of rolling strikes by the airline’s pilots, mechanics and baggage handlers into autumn prompted Qantas to shut down operations for two days in late October. The action prompted the intervention of labor arbitrator Fair Work Australia, whose orders called for 21 days of negotiations between the parties, during which no further industrial action could take place.

But by Monday, Qantas had failed to reach deals with the Australian and International Pilots Association, the Australian Licensed Aircraft Engineers Association and the Transport Workers Union, forcing binding arbitration. Although Qantas said would have rather reached new deals through negotiations, it now hopes the arbitrator will help it secure the proposed cost cuts that led to the labor unrest.

“Qantas did not terminate the negotiations today,” said Qantas CEO Alan Joyce, referring to talks with its long-haul pilots’ union. “Both parties concluded that an agreement could not be reached, so the matter will be resolved by arbitration.” Joyce did concede that the sides had made some progress during the talks, but that, in the end, neither party would move on “a number of matters.”

Qantas appeared even further away from a deal with the Transport Workers Union, which represents the airline’s baggage handlers and caterers.

“We cannot give in to demands that we hand over control of parts of the airline to the union,” Joyce said. “The union was asking us to break the law and agree to use only companies that have enterprise agreements in place with the TWU and to write this into a legal document. We simply could not agree to that.”

The airline drew the ire of its employee groups in August when it announced plans to open a new airline based in Asia “with a new name, new aircraft and a new look and feel,” along with a new low-fare venture with Japan Airlines and Mitsubishi called Jetstar Japan. Meanwhile, plans call for Qantas itself to shed 1,000 jobs as a result of a new international network strategy and retirement of aging aircraft.

The underlying problem of low-fare competition in the Asia-Pacific region continues to plague Qantas. For example, Scoot, a potential new low-fare competitor owned by Singapore Airlines, stands ready to launch operations starting in mid-2012.