25 November 2008

Dixon goes, Qantas cuts back

SYDNEY Ã¢â¬' Qantas chief executive Geoff Dixon steps down this Friday after almost eight years in charge, leaving behind an airline with plenty of question marks hanging over it.

A never-ending series of mishaps with its aircraft, a poor on-time performance record, staff discontent, and now capacity cuts across its network have marked DixonÃ¢â¬â¢s final year.

And he was fortunate a huge takeover bid from private equity failed last year, a deal he strongly backed at the time.

Had the takeover gone ahead, Dixon said, Qantas would now have been in serious financial difficulty, although he believed the airline would have survived.

The outgoing CEO believes the national carrier will eventually merge with one or more airlines as part of a global trend towards greater consolidation in the aviation sector.

He said the stress and change buffeting the airline industry made greater consolidation "inevitable".

"For Qantas, consolidation is highly desirable. It is in our interests to be at the leading edge of efforts to build a global airline grouping.Ã¢â¬~

As one of his last acts before handing over to new CEO, Alan Joyce, Dixon announced further capacity cuts to counter falling passenger demand. Qantas will reduce capacity equivalent to grounding 10 aircraft.

Ã¢â¬ÅâœWe are in unpredictable times and the international business market, in particular, has slowed,Ã¢â¬~ he said.

Dixon said that as a result of the slower demand Qantas now expected its profit before tax for the 2008/09 financial year to be around A$500 million.

Dixon said Qantas would manage the capacity cuts by not taking up the planned lease of two A330-200 aircraft; changing the flying patterns of existing aircraft to free up the equivalent of six B747-400s, three B767-300s and one A320-200 aircraft between now and mid-2010.

It will also halt all planned domestic market growth for Qantas and Jetstar.

Ã¢â¬ÅâœOur actual flying in the next six months will be four percent below the equivalent period in 2008,Ã¢â¬~ Dixon said.

Previously announced cuts of 1,500 jobs will remain along with an accelerated leave programme.

By Ian Jarrett