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Struggling Qantas Will Shrink to Survive

Qantas, the Flying 'Roo, has hit a rough patch. So rough, in fact, that it will have to all but reinvent itself to keep flying.

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The most recent sign of trouble: a $208 loss for the first half of the airline's fiscal year. According to Qantas CEO Alan Joyce, as quoted in Air Transport World: "We are facing some of the toughest conditions Qantas has ever seen."

Tough conditions call for tough measures, and the airline this week outlined its plans to remain solvent and aloft. The highlights:

  • Reduce costs for A$2 billion
  • Eliminate 5,000 jobs
  • More than 50 aircraft to be sold or deferred
  • Capital expenditures cut by A$1 billion

Although not mentioned in the official plan, there have also been persistent rumors that the airline is looking to at least partially sell off its Qantas Frequent Flyer program, a prospect that many frequent flyers find alarming.

Indeed, as a general rule, companies forced to shrink to survive find their service levels eroding, as significant cost cuts inevitably affect customer-facing operations.

Seeking to address such concerns, Joyce voiced his commitment to maintaining the airline's customer focus: "Despite the tough decisions we have to make, we will keep delivering outstanding service for our customers."

Happy talk and good intentions are well and good, but they won't be enough to keep the airlines' customers onboard.

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This article originally appeared on FrequentFlier.com.

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