By Matt O'Sullivan
Financial punishment ... losses continue to escalate as industrial action continues.Credit: Jessica Shapiro
THE cost to Qantas of its damaging standoff with unions is already estimated at up to $20 million, even before ground crew and aircraft engineers escalate their industrial action today and tomorrow.
Thousands of Qantas passengers face delayed and cancelled flights again today as baggage handlers and other ground staff strike for four hours at all of the country's major airports. Further disruptions are expected tomorrow due to a planned four-hour stoppage by Qantas engineers.
Adding to the woes of passengers flying overseas today on all airlines will be stoppages of up to four hours by customs officers across the country, after negotiations with Customs over a new pay deal stalled.
But one of the biggest threats to Qantas from its dispute with unions over the coming weeks will be a growing backlog of aircraft requiring maintenance work.
In 2008, a 10-week long standoff with engineers led to widespread delays and cancellation of Qantas flights due to a backlog of work that took months to clear.
Qantas said yesterday that the latest go-slow work by engineers had already caused ''significant delays'' in getting aircraft maintained and back into service. It declined to put a figure on the backlog of aircraft needing maintenance, other than to say the disruptions would have a ''cumulative impact''.
Macquarie Equities analysts estimate the operational disruptions from the stoppages since August have cost Qantas between $10 million and $20 million in lost revenue and other costs.
They warn that Qantas risks handing to Virgin Australia a bigger share of the lucrative premium travel market at a time when its rival is improving its services and products. Virgin has about a 13 per cent share of Australia's corporate travel market, and wants to raise it to 20 per cent within the next two years.
''We suspect Virgin is in a far better position from a product and service perspective to retain some of these passengers … given the domestic business-class roll out, lounge revamps and improved Velocity Frequent Flyer program,'' they said. ''Virgin only needs to attract and retain two out of every 10 corporate passengers in order for the strategy to be effective and to ensure a significant improvement in operating income.''
A resolution to the increasingly acrimonious industrial dispute is seen as crucial to Qantas regaining the confidence of investors and the travelling public.
Shares in Qantas have risen 13 per cent since hitting a record low last week, but are still trading at a 39 per cent discount to their value at the start of the year. The Macquarie analysts say the share price is also under pressure from a lack of detail over plans to turn around the fortunes of the airline's premium international operations, and the risk of weaker demand for travel over the next year.
Qantas said 14 flights would be cancelled and a further 38 delayed by up to an hour today as a result of the four-hour stoppages by ground crew.
The long-haul pilots' union is also ramping up its campaign in the lead up to Qantas's annual meeting on October 28, launching a website aimed at lobbying retail shareholders. The pilots have been alerting passengers to their campaign via in-flight announcements for weeks.
Despite remaining at loggerheads with its three key unions, Qantas has reached agreement over a new three-year contract covering 360 storeworkers.
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