Jetstar estimates that ongoing industrial action will impact its earnings by about A$20-25 million ($14-17 million) and may take three Boeing 787-8 out of its fleet to maintain profitability.
The budget carrier says it has identified three 787-8s that are currently serving “loss-making and marginal international routes” and will make the decision in the first quarter of 2020.
It declines to identify the loss-making routes, but Cirium understands that its Honolulu, Hawaii, services in particular have been underperforming for some time, impacted by the weak Australian dollar against the US dollar.
“A business case has been developed to sell these three aircraft, with capital to be reinvested in other parts of the Qantas Group or returned to shareholders,” says the airline, which currently operates 11 787s.
While Jetstar is believed to have been reviewing its fleet and route network for some time, this could be accelerated by ongoing industrial action by its pilots and ground crew.
The carrier is also making contingency plans for further planned industrial action, including cancelling 10% of domestic services in January.
Some 90 Jetstar flights have already been cancelled over the weekend of 14 and 15 December in the first strike by pilots and ground crew.
The Australian Federation of Air Pilots and the Transport Workers Union, representing Jetstar’s pilots and baggage handlers, respectively, have said they do not intend to take action between 20 December and 3 January, but will give three to five days’ notice of action outside of these dates.
The airline says the unions are pursuing wage claims that are “unsustainable, inconsistent with the 3% increases offered across the Qantas Group and ultimately incompatible for a low fares airline.”