From the Archives, 1992: First casualty of $3bn merger

First published in The Sydney Morning Herald on September 15, 1992

HARRIS FIRST CASUALTY OF $3BN MERGER

Australia’s new $3 billion airline, the merged Qantas and Australian Airlines, suffered its first major casualty yesterday with the resignation of Australian’s chairman, Mr Ted Harris.

His departure was confirmed by Qantas‘s chairman, Mr Bill Dix. At the same time, Qantas‘s group chief executive, Mr John Ward, said the airline had identified 627 more jobs to be trimmed from the 27,000-strong combined workforce, with 211 to go this year.

Mr Ward said the ACTU had agreed to co-operate in the cutbacks but said there would be “proportionately more casualties among management ranks” than in personnel, and “no mass redundancies”.

Both airlines have slashed about 5,000 jobs over the past 18 months in cost-reduction programs aimed at eliminating recent operating losses. Only last week, Australian announced an after-tax loss of $48.4 million for its 1991-92 year.

At a ceremony at the Qantas jet base at Sydney Airport to mark the national flag carrier’s $400 million purchase of Australian from the Federal Government, Mr Dix disclosed that Mr Harris was not part of the merged leadership team.

Earlier in the day, Mr Dix had flown to Canberra to hand over a cheque to the Government’s task force on asset sales in exchange for all the share certificates for Australian Airlines Ltd. He said Australian would now have a board of three: himself, Mr Ward and Australian’s chief executive, Mr John Schaap.

The merger takes Qantas into the big league. With annual revenues of about$5.7 billion, the airline’s world ranking will jump from 20th position to 15th. Its new combined passenger numbers will move it up from 43rd to 21st.

Qantas’s fleet of 31 Boeing 747s and 20 Boeing 767s will be increased by Australian’s four Airbus A300s, 26 Boeing 737s and six Boeing 727s.

Australian’s five small domestic subsidiary airlines will add another 40 aircraft to the fleet. Other assets from Australian include the Queensland resort islands of Great Keppel, Brampton, Dunk, Bedarra and Lizard.

Mr Dix said the merger was “the single most important event in the aviation history of this country”.

He confirmed that the trade sale of 49 per cent of the joint airlines -with 35 per cent available to foreign airlines - should be completed by February and that a public float of the remainder should be over by May.

There has already been a “management spill” at Qantas and Australian, with senior executives standing down from their positions and being reappointed to jobs which hold group responsibilities.

Mr Ward said Australian Airlines would retain its main office in Melbourne but suggested that over time, most senior managers would operate from the Qantas Centre in Sydney.

He said Qantas was not concerned by Ansett’s announcement on Sunday of major co-operative deals with British Airways, United Airlines, Cathay Pacific and All Nippon. Such deals were normal in the airline industry.

Qantas-Australian was more than ready for any competition.

“We will build a seamless service between the two airlines that will allow Australians from anywhere in this country to fly anywhere on the Qantas international network and experience a consistently high level of service throughout their journey,” Mr Ward said.

The merger would realise a range of efficiencies. Australian would be represented around the world through well-established Qantas offices and Qantas would be on sale at Australian Airlines offices around Australia.