Airline that stops a nation

QANTAS grounded its entire domestic and international fleets indefinitely last night - stranding thousands of passengers - as it declared it would lock out all workers engaged in industrial action.

Announcing the unprecedented action against three unions, Qantas's chief executive, Alan Joyce, said the drastic strategy meant the cancellation of all flights, effective immediately. The federal government secured an urgent hearing of Fair Work Australia, which continued into this morning, in the hope it would terminate all industrial action by both Qantas and the unions and get planes back in the air. Otherwise, about 68,000 passengers will be stranded each day.

But Mr Joyce said he had been forced into the drastic action because the unions threatened to carry on an industrial campaign until next year. The dispute had caused $70 million damage to the airline and would cost $15 million for every week that the dispute dragged on.

''They are trashing our strategy and our brand,'' Mr Joyce said. ''They are

deliberately destabilising the company and there is no end in sight.'' If it continued, he said, Qantas would have no choice but to shut down its business ''part by part … We are locking out until the unions withdraw their extreme claim and reach agreement with us,'' Mr Joyce told a news conference at the airport in Sydney.

Qantas executives and the board would not be paid during the lockout.

The vice-president of the Australian and International Pilots Association, Richard Woodward, said Mr Joyce was ''completely mad''.

''Alan Joyce is holding a knife to the nation's throat,'' Captain Woodward said. ''No one predicted this, because no one thought Alan Joyce was completely mad.

''This is a stunning overreaction. It is straight-up blackmail. I knew he was trying to kill Qantas, but I didn't know he wanted to do it this quickly.''


Mr Joyce believed grounding the fleet and locking out workers from three of its unions - the Australian Licenced Aircraft Engineers Association, the Transport Workers Union, representing ramp, baggage and catering staff, and the Australian and International Pilots Association, representing the long-haul pilots - was the only effective avenue to bring about a solution to the dispute.

In August, Mr Joyce announced a major restructuring that included establishing two new subsidiary carriers in Asia, using cheaper labour, and 1000 job losses to save the airline's loss-making international arm.

The unions insist on reciprocal conditions for employees of any subsidiary businesses overseas, a demand Mr Joyce claims will kill the airline. He said: ''This is death by a thousand cuts that is bleeding Qantas by $15 million a week. Some union leaders have said they want to slow-bake us over a long period of time and we can't afford that. We need to bring this to a close and we need to have an agreement before we put the airline back in the air. This is us taking the only action that we have available under the Fair Work Australia Act.''

After chaos for racegoers who had travelled to the Victoria Derby yesterday, people travelling interstate to the Melbourne Cup on Tuesday face uncertainty. The Victoria Racing Club hoped they would be able to make alternative travel arrangements.

Seventeen heads of state had been due to fly out of Perth on Qantas flights this afternoon from the Commonwealth Heads of Government meeting in Perth. Jetstar and QantasLink will continue flying, as will its freight arms, Express Freighters Australia and Atlas Freighters.

The federal Minister for Transport, Anthony Albanese, was informed by Mr Joyce about 2pm yesterday. The government is able, under section 24 of the Fair Work Act, to ask the industrial watchdog to force both sides of the dispute into mandatory conciliation. ''We hope, with a little bit of common sense, that this can be resolved,'' Mr Albanese said.

At Sydney Airport last night, five police officers were on hand to control any commotion, although most passengers appeared to be remaining calm. A rugby fan, Jane Burnam, was due to fly home to Johannesburg via Perth last night to reunited with her family, who had already left Australia. ''I'm very anxious to go home.''

Last week the aircraft maintenance engineers' union wrote to Mr Joyce, asking him to explain why he was breaching the Qantas Sale Act and the company's constitution.

The letter, obtained by The Sun-Herald, accused Mr Joyce of trying to move most of the airline's international division overseas in breach of the act. The act, passed after the airline was privatised in 1995 to ensure the Australian character of Qantas was retained, ''prohibits Qantas from conducting scheduled international air transport passenger services under a name other than: its company name; or a registered business name that includes the expression 'Qantas'''. It also requires most of Qantas International's maintenance, administration, training, catering and flight operations to remain here.

With Jim O'Rourke and David McCowen