Outcome of Avalon Heavy Mantenance Review

Sydney | Published on 8th November 2013 at 9:26

In September we announced a review of the Qantas heavy maintenance facility at Avalon airport.

Avalon is where we do heavy maintenance on our fleet of Boeing 747 aircraft. This is maintenance that takes the aircraft out of its regular flying pattern for up to three months at a time, once every few years.

For context, that is very different from what we call line maintenance – which is lighter, more regular maintenance that we do every day at airports around Australia. Line maintenance was not part of this review.

The need for a review was clear.

We are gradually retiring our 747s, which means there is not enough work to keep the Avalon base viable and productive.

Over the next four years there are 22 months with no scheduled maintenance at Avalon. During this time there will be no aircraft in the hangar for our employees to work on.

Let me briefly explain how this situation has come about.

Since the mid-2000s, we have accelerated the modernisation of our fleet – introducing new aircraft types to replace older models.

In our international fleet, we have taken delivery of 12 Airbus A380s and 10 Airbus A330s.

At the same time, we have been gradually retiring our 747s.

In 2004, we had 35 747s.

Today, we have 15.

Within three years, we will have just ten 747s.

This process of fleet renewal makes Qantas more efficient and competitive. It means a better travel experience for our customers. It is popular with our employees, who enjoy working with a younger fleet. And it is essential to Qantas’ future success.

Today the average age of the Qantas Group’s fleet is below eight years, the youngest it has been for two decades.

Of course, fleet renewal on this scale has implications for maintenance.

As we’ve retired 747s, the amount of heavy maintenance done at Avalon has steadily decreased. As I said a moment ago, that trend will continue in the coming years.

Avalon has become sub-scale and unproductive. That is not a reflection on the employees who work there – they are skilled and dedicated engineers. But there is going to be less and less work for them to do.

If we continued down this path without changing anything, it would come at a cost to Qantas as a whole.

Over the past eight weeks, we have carried out a comprehensive review process in good faith.

I acknowledge and appreciate the constructive approach taken by all parties during this period.

We have held regular meetings with the relevant unions and communicated with our employees and contractors.

We have considered all possible options for the future of Avalon and listened to proposals from employees and unions.

We looked at Avalon taking work from our Brisbane heavy maintenance base. And we looked for work from other airlines.

I acknowledge the union proposal for some employees to take up to three months leave without pay, in an effort to keep the facility open.

However, three months’ leave without pay would not come close to addressing the gap of 22 months with no work over the next four years.

Despite the best efforts of everyone involved in the review process, there is no workable solution that would allow us to keep operating this sub-scale facility.

We have informed our employees this morning that we will close Avalon heavy maintenance by the end of March 2014.

This will affect 53 Qantas employees and 246 contractors employed by Forstaff.

From today, we will begin working with our employees on their future options, as well as working with Forstaff. We will look to redeploy Qantas employees to jobs elsewhere in the Qantas Group. Where that is not possible, we will offer generous redundancy packages. And we will provide assistance to help them find jobs outside Qantas.

The 15 747s that remain in our fleet will still require some heavy maintenance.

Our next step is to examine where this work will be done. As well as considering existing onshore facilities, we will also examine specialist 747 maintenance providers – including in Germany, Singapore, Hong Kong, the UK, and the U.S.

Any facility would need to meet Qantas’ safety standards and be approved by Australia’s safety regulator.

The decision to close Avalon is not one we have taken lightly. But it is the right decision for the future of Qantas.

Fleet renewal is more vital than ever, with unprecedented competition in the global aviation market.

Over two years ago, we set out the formidable challenges facing Qantas International. And we said that big changes would be needed over the five years to ensure its survival and future success.

We have not shirked those changes, launching the biggest transformation since Qantas was privatised in 1995.

We have made great progress, but the market remains extremely tough and there is still work to do. There will be further changes to our engineering operations in order for Qantas to remain competitive.

Even after Avalon is closed, Qantas will still be the biggest employer of aircraft engineers in Australia by far. And we will still be the only major airline to do its own heavy maintenance in Australia.

We will continue to do heavy maintenance on around 110 aircraft at our main base in Brisbane, including A330s, 767s and 737s. During 2013 we have invested $30 million in Brisbane to bring it up to the highest standards in the industry.

QantasLink’s fleet of turboprop and Boeing 717 aircraft will continue to be maintained in Australia.

Line maintenance – the work we do on our aircraft every day – will continue at 19 ports around Australia.

And we are investing a further $100 million to create up to 100 new jobs in Victoria, to support Jetstar’s fleet of Boeing Dreamliners.

Overall, Qantas Engineering employs more than 4,400 people in Australia – approximately 600 in Melbourne.

However, when it comes to Avalon, the facts are clear. We cannot keep running a facility that is inefficient now and will become unviable in future.

That would not be responsible. Nor would it be in the interests of the Qantas Group as a whole, including 30,000 employees across Australia.

For all these reasons, we have made the difficult decision to close Avalon.

I want to mention the Victorian Government. The Government understands the pressure we are under, because it is facing the same problem in Victoria’s manufacturing industry – including in the greater Geelong area.

I’d also like to recognise the efforts and advocacy of the Federal Government and Federal MPs, especially the Member for Corangamite, Sarah Henderson.

Both jurisdictions have made clear to us the importance of jobs in the Geelong region. The decision we have announced today is not caused by any government policy, or any lack of activity on their part.

I’d now like to ask Alan Milne, Head of Engineering for Qantas International, to join me. We’re happy to take questions.