Australian flag carrier Qantas Airways has grounded all aircraft and suspended its domestic and international operations indefinitely, dramatically upping the stakes in its ongoing battle with three workers' unions.
The airline reached this decision after deciding to lock out all employees covered by the agreements being negotiated with the Australian Licenced Engineers Union (ALAEA), the Transport Workers Union (TWU) and the Australian and International Pilots Union (AIPA) from 18:00h Sydney time on Monday.
This comes after several weeks of occasional industrial action by members of the three unions, which has resulted in flight cancellations and disruptions that have cost Qantas Australian dollar (A$) 68 million so far. The airline added that it is losing A$15 million in revenue due to the industrial action.
The Oneworld carrier said that even though the lockdown would come into effect on Monday, the "tense environment" that means that "individual reactions to this lock-out decision may be unpredictable", and that led to the decision to ground all aircraft worldwide.
This would affect only the Qantas international and domestic fleet, it said. Aircraft currently in the air would complete their flights and remain grounded until the impasse is over.
Operations by Qantas' low-cost subsidiary Jetstar will not be affected, and the other members of the Group like QantasLink, JetConnect, Express Freighters Australia and Atlas Freighters will continue flying.
"This is a crisis for Qantas," said its CEO Alan Joyce in a statement. "If this action continues as the unions have promised, we will have no choice but to close down Qantas part by part."
Meanwhile, rival carrier Virgin Australia could add domestic capacity and work with international partners to help fill the gap left by Qantas' grounding.
"With this industrial action that has been going on in the last week, we have announced an additional 40,000 seats in the market over the next number of weeks and months," said a spokeswoman.
"We are obviously now working with all our alliances including Singapore Airlines, Etihad Airlines, Air New Zealand and Delta to see if we can get any extra planes, any extra capacity into the domestic market and also obviously helping those people stranded internationally and abroad."
Joyce pointed out that Virgin Australia is the "main beneficiary" of the grounding. "The great irony is that it [Virgin Australia] pays less, is less unionised and does its heavy maintenance offshore. Yet there is no union pressure on Virgin," said Joyce.
Qantas Airways management believes it had no choice but to initiate the suspension in order to force the unions to "forge sensible deals" with the airline.
"The unions' industrial campaigns are designed to scare away customers. It has become impossible for Qantas to serve our third-party maintenance clients. They are trashing our strategy and our brand. They are deliberately destabilising the company. And there is no end in sight," said Joyce.
The unions, added Joyce, were not just striking over pay but also "trying to dictate how we run our business".
"These are impossible demands. We cannot agree to them because they could ultimately put the Qantas Group at risk," said Joyce. "These unions are running utterly destructive industrial campaigns against Qantas and our customers, hurting all our employees and undermining Australian business."
It added that bookings on the highly lucrative East coast routes are down 25% year on year, and bookings on the loss-making Qantas international business are 10% lower than expectations. Its internal customer research shows there is an "alarming increase in people who intend not to fly" with the airline - up from a "normal" 5% to 20% domestically and almost 30% internationally.
"This course of action has been forced upon us by the extreme and damaging course chosen by the leaders of three unions. It is now over to them. The ball is in their court."