Aussie court ends Qantas strike, fleet grounding

Associated Press
Idle Qantas planes are reflected in a window at Sydney Airport in Sydney, Sunday, Oct. 30, 2011. Qantas Airways grounded all of its aircraft around the world indefinitely Saturday due to ongoing strikes by its workers. (AP Photo/Rick Rycroft)
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Idle Qantas planes are reflected in a window at Sydney Airport in Sydney, Sunday, Oct. 30, 2011. Qantas Airways grounded all of its aircraft around the world indefinitely Saturday due to ongoing strikes by its workers. (AP Photo/Rick Rycroft)

CANBERRA, Australia (AP) — The chief executive of Qantas Airways says the carrier's flight schedule will return to normal by Tuesday after an Australian court intervened in a bitter labor dispute that prompted the world's 10th-largest airline to ground its entire fleet.

Qantas passengers were gathering at airports in Australia and Los Angeles in expectation that the "Flying Kangaroo" as the Australian flag carrier is known will soon return to the skies after the grounding disrupted the travel of tens of thousands of people.

Qantas CEO Alan Joyce said the first of the grounded aircraft would return to the sky Monday afternoon Australia time, around 12 hours after an emergency ruling by an arbitration court ended weeks of strikes and canceled a staff lockout.

Australia's Civil Aviation Safety Authority has yet to clear the airline to resume flying, but is expected to do so within hours, said a spokesman Peter Gibson. Qantas, meanwhile, has told Los Angeles International Airport that four flights will depart that airport Sunday night local time, the airport said in a statement.

The court ruling is a major victory in the airline's battle with unions representing pilots, aircraft mechanics, baggage handlers and caterers, whose rolling strikes have forced the cancellation of 600 flights in recent months, disrupted travel for 70,000 passengers and cost Qantas 70 million Australian dollars ($75 million).

But some aviation experts said the surprise grounding of all 108 planes on Saturday, at a cost of $20 million a day, has hurt the Australian flagship carrier's reputation around the world.

Still, the stock market welcomed the weekend developments as allowing the airline to focus on its long-term strategy. Qantas shares on Monday jumped almost 5 percent to AU$1.62 on the stock exchange in Sydney.

Henry Harteveldt, an airline industry analyst in San Francisco, predicts the shutdown will do long-term damage to the Qantas name by hurting its reputation for reliability.

"A lot of travelers won't take a chance and will book away to Virgin Australia, Air New Zealand and other airlines," Harteveldt said. "Brand loyalty in the airline business is very low, and there is so much competition."

Before the court ruling, Virgin Australia said it was scheduling extra flights and offering 20 percent fare discounts to help stranded Qantas passengers through Thursday.

If Qantas loses customers, that could also hurt partners in its alliance of global airlines, including American Airlines. A rival alliance that includes Air New Zealand and is led by United Continental Holdings Inc. could benefit, as could a third group of airlines that includes several major Asian carriers and is led by Delta Air Lines Inc. and Air France-KLM.

CEO Joyce praised the court ruling, which prevents unions from taking any further strike action over their demands for pay hikes and job security clauses under news contracts being negotiated. The strikes have been blamed for a sharp decline in the airline's future bookings.

"The important thing is that all industrial action is now over and we have certainty," Joyce told reporters in Sydney.

"We will be returning to business as usual over the next 24 hours," he said.

Joyce spoke to the media before the airline gave the regulator documents to support its case that it was restart services, said Gibson, the aviation regulator spokesman.

"At some point in the not too distant future, we'll go back to them and say, 'yep, we're happy with the way you've done it all,' and they'll schedule their flights as they wish to do so," Gibson said.

Other industry veterans said the lockout was a daring move that will pay off for Qantas, which wants to expand the low-cost, low-fare model that it uses at its Jetstar Airways subsidiary.

Jetstar has extensive routes to Southeast Asia and Japan, and lower costs than Qantas. But Qantas unions fear that expansion of low-cost airlines will result in Australian jobs being sent overseas. Joyce hopes to bend the unions closer to the company's vision for growth by tapping into Asian markets.

"It was a very shrewd move by their CEO to force the issue and stop the potential deterioration of the brand," said Mo Garfinkle, an airline consultant who has worked for Qantas rival Virgin Australia. "In the end, it will benefit Qantas financially."

Garfinkle said the short duration of the fleet grounding will help Qantas get back up to full speed quickly, cutting its losses.

Prime Minister Julia Gillard on Monday described the grounding as "extreme," while Transport Minister Tony Albanese has sharply criticized Joyce for giving the government only three hours notice of his plans.

The Australian government, angered by a lack of warning of the grounding, had called an emergency court hearing on Saturday night to end the work bans for the sake of the national economy.

The three judges heard more than 14 hours of testimony from the airline, the government and unions. Workers have held rolling strikes and refused overtime work for weeks out of worry that some of Qantas' 32,500 jobs would be moved overseas in a restructuring plan.

The unions wanted the court to temporarily suspend the employee lockout so that strike action could resume if negotiations in the labor dispute failed to progress. But the airline said the strikes had devastated the airline's reputation for reliability and that the threat needed to be removed permanently before customers would return.

Tribunal President Geoffrey Giudice said the panel decided that a temporary suspension would still risk Qantas' grounding its fleet in the future and would not protect the tourism and aviation industries from damage.

Qantas is the largest of Australia's four national domestic airlines, and the grounding affected 108 planes in 22 countries.

About 70,000 passengers fly Qantas daily, and would-be fliers this weekend were stuck at home, hotels or airports, or even had to suddenly deplane when Qantas suspended operations. More than 60 flights were in the air at the time but continued to their destinations, and Qantas was paying for passengers to book other flights.

Qantas infuriated unions in August when it said it would improve its loss-making overseas business by creating an Asia-based airline with its own name and brand. The five-year restructure plan will cost 1,000 jobs.

The airline also said in August that it had more than doubled annual profit to AU$250 million but warned that the business environment was too challenging to forecast earnings for the current fiscal year.

Qantas is the 10th-largest airline in the world by passenger miles flown, according to the International Air Transport Association, an airline trade group.

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Associated Press writers David Koenig from Dallas, Texas, and Andrew Dalton from Los Angeles contributed to this report.

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