Qantas culls 20 IT managers in restructure

Qantas Airlines has sacked 20 IT staff as part of a series of redundancies in a massive restructure forced by rising international fuel prices and increased market competition from no-frills carriers.

A staff cull of 1500 began last week after Qantas announced it was forced to embark on a massive reorganisation due to increasing competition from discount airlines Virgin Blue and Impulse Airlines, fuel price hikes, the floundering Australian dollar and falling foreign exchange rates.

The 30,000-employee company laid off 220 senior managers, 20 of whom were from IT and services, newly appointed executive general manager of technology and services David Burden told Computerworld. The IT staffers, all from general management, have either retired or left the company to pursue management opportunities elsewhere, Burden said.

Moreover, he confirmed there were more IT staff cuts in the 1250 non-operations employees made redundant last week. "It would be naive to think they would not come from technology and services," he said.

The redundancies will cost Qantas A$50 million but save the company $100 million a year, Qantas' new chief executive Geoff Dixon said last week.

Attempting to play down the impact the downsizing will have on the airline giant's technology work, Burden stressed that "nothing particularly drastic" would happen to Qantas' IT management capacity.

The organisation's large-scale technology projects include several Internet-based customer service projects used in freight operations and sales, worth around $80 million and with an expected ROI of $100 million, according to Burden.

He said other important projects include a $250 million Network Redesign Project (NRP) - a global fibre-optic network spanning 170 sites in Australia - and a number of small in-house enterprise resource planning (accounting) initiatives designed to reduce internal administration costs.

Overall, Burden said he felt confident Qantas would continue to develop customer-focused e-commerce projects, maintaining they would each generate around $25 million in revenue for the carrier over the next financial year.

While he believes the IT management cut of 20 could "go up" depending on future workload, Burden said Qantas' $450 million IT operating budget would remain stable over the next year, with a possible reduction to $200 million allocated to systems maintenance. "Because we have less IT resources, we're going to try and work smarter, developing new systems. We're going to have to learn how to make use of object-oriented applications, for instance," he said.

Qantas' IT group of 900 is partially decentralised with 50 per cent of IT infrastructure work contracted to services outfit and Telstra subsidiary Advantra for networking (a $250 million contract). IBM GSA and Unisys manage Qantas' disaster recovery services, and NCR its PC maintenance. According to Burden, contracts with services partners would not be withdrawn under the reorganisation.

However, his outlook for the carrier's financial health this year appeared bleak. "Economic conditions are going to bite even harder in the second half," he said.

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