Qantas to resume flights after government intervenes in dispute

By Sonali Paul and Lincoln Feast

Qantas's action left the government with no option but to step in and demand the tribunal make an urgent ruling on the dispute, which had been bleeding an airline that carries about a fifth of Australia's international passengers.

Qantas said flights could resume as early as Monday afternoon, on a limited schedule.

"We are pleased that after 24 hours of turmoil that common sense will be restored to the aviation and tourism sectors of Australia," Assistant Treasurer Bill Shorten said after the independent labor tribunal, Fair Work Australia, ordered the end to hostilities in the early hours of Monday morning.

The tribunal ordered Qantas and its unions to end all industrial action and resolve the dispute within 21 days or face a binding arbitration decision.

"We will be getting our aircraft back up in the air as soon as we possibly can," Qantas Chief Executive Alan Joyce said.

But with 108 aircraft grounded, almost 500 flights canceled and Australia's tourism image tarnished in a single weekend, Prime Minister Julia Gillard was left fuming at Qantas's tactic.

"I believe Qantas took an extreme approach on Saturday," Gillard told Channel Seven TV on Monday. "With very little notice to government or passengers, it grounded planes. It did that in circumstances where it had other options."

The dispute has dogged Qantas for months but it escalated recently when it announced plans to cut 1,000 jobs and order $9 billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The airline made a pre-tax profit of $552 million in the year to June 30.

Union representatives said they would work with Qantas to resume flights as soon as possible but some of them sought to cast Joyce as a reckless manager prepared to crash the airline rather than seek a negotiated settlement.

"The board should immediately sack their out-of-control CEO," said Captain Richard Woodward, vice president of the Australian and International Pilots Association. He described Joyce's behavior as "megalomaniacal."

The grounding angered stranded passengers and the government, overshadowing Prime Minister Gillard's hosting of a summit of Commonwealth leaders in the western city of Perth.

On Sunday, Gillard said she had intervened because of concerns about damage to the economy and had called on the airline and union to quickly end the industrial action.

Almost 20 leaders at the summit had been booked to fly out with Qantas, but Gillard said most had made alternate flight plans.


Qantas Chief Executive Joyce estimated his "bold decision" to ground the fleet would cost the company A$20 million ($21.4 million) a day.

"I apologize to all Qantas passengers that have been impacted by the industrial action by unions over the past few months and in particular the past few days," he said.

The tribunal deliberated for more than 12 hours over the weekend as lawyers for the airline, union and government questioned executives and advisers and made submissions.

Qantas' shares, which have fallen almost 40 percent this year, remain vulnerable on Monday, with investors still uncertain how the tribunal will rule if all sides cannot hammer out an agreement and the dispute goes to arbitration.

"If they are not on a trading halt I would expect them to come under a bit of downward pressure, because it is going to have a financial impact and there has been a lot of talk about damage to the brand," said Cameron Peacock, market analyst at IG Markets.

"It's obviously proved unpopular with people stranded around the globe but in the long-run, and (Joyce) is looking beyond the next week, it's probably the right thing to do."

Qantas said a series of rolling stoppages by unions had cost the airline almost A$70 million since September and driven down bookings, threatening its survival.

The Qantas dispute is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labor markets and a boom in resource prices.

It had threatened to become the most significant disruption to Australian aviation since a six-month 1989 dispute that had a major impact on tourism and other business sectors. Industrial action by engineers cost Qantas around A$130 million in 2008.


Qantas check-in desks across Australia were largely empty on Monday. The airline, which usually flies more than 60,000 people a day, is paying for accommodation and expenses for stranded travellers and putting some on alternative flights.

Australian rival Virgin Australia said earlier it was adding 3,000 seats on its domestic network on Monday, in addition to 3,500 seats on Sunday.

Virgin Australia's airline partners Abu Dhabi's Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas' decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

"To resolve this at the expense of paying customers on one of the biggest flying days in Australia is quite frankly ... bizarre, unwarranted and unfair to the loyal customers that Australia has," a businessman, who gave his name only as Barry, told Sky TV at Melbourne airport.

This weekend is one of Australia's busiest for travel, with tens of thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday, dubbed "the race that stops the nation."

(Additional reporting by Narayanan Somasundaram and Ed Davies in SYDNEY, Rebekah Kebede and Michael Perry in PERTH, James Grubel in CANBERRA, Praveen Menon in DUBAI; Editing by Neil Fullick)