Qantas Airways hopes to save A$70-100 million ($68-98 million) annually through the restructuring of its heavy aircraft maintenance and engineering operations in Australia.
Under the restructuring, the carrier will close its maintenance operations for Boeing 737 aircraft at Melbourne's Tullamarine Airport, resulting in 422 layoffs, Qantas said in a statement. The Tullamarine line maintenance operation will remain open, however, and continue to employ 300.
The 737 work will be moved to Brisbane, where Qantas maintains its Airbus A330 and 767 aircraft.
The carrier's Avalon base near Geelong will continue to support the carrier's 747 fleet, but 113 jobs will be shed owing to reductions in the use of this type. Avalon will also do some maintenance work on 737s and 767s, as well as aircraft reconfiguration work and one-off maintenance tasks.
One-time costs associated with the restructuring will amount to A$50 million. The carrier's A380 aircraft undergo heavy maintenance overseas.
The Tullamarine closure is not unexpected. In April, Qantas chief executive Alan Joyce told Flightglobal that the carrier was planning a major overhaul of its maintenance operations, with details to be announced this month.
"The restructure is necessary as there is currently not enough heavy maintenance work required for three separate facilities and the introduction of new technology and modern aircraft means there will be a further 60% reduction in heavy maintenance requirements over the next seven years," says the carrier.
Joyce says Qantas is the only carrier to conduct heavy maintenance at its own facilities in Australia, which means its heavy maintenance cost base is 30% higher than its competitors.
"We must close this gap to secure Qantas' future viability and success," says Joyce.
"Qantas has invested heavily over the past 10 years in new aircraft that are more advanced, more efficient, attractive to our customers and require less maintenance, less often," says Joyce. "But we cannot take advantage of this new generation of aircraft if we continue to do heavy maintenance in the same way we did 10 years ago."