Qantas suspension to force unions into

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Qantas Airways management believe that the airline had no choice but to indefinitely suspend its operations in order to force its 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 CEO Alan Joyce.

Australia's flag carrier suspended its domestic and international operations today 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.

The airline decided to ground all aircraft immediately, however, as the tense environment" that means that "individual reactions to this lock-out decision may be unpredictable", it added.

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 ($72.9 million) so far. The airline added that it is losing A$15 million in revenue due to the industrial action.

The unions, added Joyce, were not just striking over pay but also "trying to dictate how we run our business".

Pilots want Qantas to pay Jetstar pilots on codeshare flights the same rate as they get at the full service carrier, a move that force the end of the codeshare agreement, said the airline. The engineers want Qantas to stop much of the third party outsourcing, while the TWU is preventing the airline from "sensible use" of contractors," it added.

"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."

The industrial action to date by the union members has cost the airline Australian dollar (A$) 68 million, and Qantas is losing approximately A$15 million in revenue a week, said the airline.

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 down 10% from expectations. Its internal customer research shows that there is an "alarming increase in people who intent not to fly" with the airline - up from a "normal" 5% to 20% domestically and almost 30% internationally.

Domestic rival Virgin Australia, Joyce said, is the "main beneficiary" of this and has already announced capacity increases.

"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.

"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."