Australia labor tribunal seeks to get Qantas fleet

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Qantas Airways sparred with unions at a second labor tribunal on Sunday after Australia's prime minister called for an end to the industrial dispute that grounded the airline's entire fleet, stranding tens of thousands of passengers around the world.

Qantas grounded more than 100 aircraft on Saturday and said it had canceled 447 flights affecting more than 68,000 passengers by Sunday afternoon. It is seeking to bring to a head a prolonged, bitter battle with its unions over pay and working conditions and a strategy to set up two new airlines in Asia.

The national carrier, which made a pre-tax profit of $552 million in the year to June 30, plans to cut 1,000 jobs and order $9 billion worth of new aircraft as part of a makeover to salvage its loss-making international business.

The escalation in the dispute angered the government and came as an embarrassment for Prime Minister Julia Gillard, who was hosting a summit of Commonwealth leaders in the western city of Perth, 17 of them booked to fly out on Sunday with Qantas.

"There is no case for this radical over-reaction," Assistant Treasurer and former senior union official Bill Shorten told the Australia Broadcasting Corp. "Sixty-eight thousand Australians and the tourism industry have been grossly inconvenienced by this high-handed ambush of the passenger."

Gillard, criticized for not intervening earlier in the dispute, said the tribunal hearings in Melbourne were needed to quickly resolve the impasse.

"We took this action because we were concerned about the damage to the economy," she told reporters in Perth, where the dispute overshadowed the Commonwealth meeting. "The government is arguing for an end to the industrial action.

Most leaders, she said, had made alternate flight plans.

Bold, unbelievable decision

Joyce estimated the "bold decision, an unbelievable decision" to lock out workers and ground the fleet would cost the company A$20 million ($21.4 million) a day.

He said the tribunal, which reconvened after a late-night meeting on Saturday, would have to terminate all industrial action before the airline could resume flying.

"We're hoping a determination is made today and that will give us certainty about what we can do and start planning to get the airline back in the air," Joyce told Australia's Sky News, indicating the airline could be flying again on Monday if termination of industrial action was ordered.

Qantas and the unions would then have 21 days to negotiate a settlement before binding arbitration would be imposed.

Union lawyers grilled three Qantas executives for more than five hours. Questioning focused on when Qantas officials first knew Joyce was considering locking out Qantas employees and why the airline was unwilling to allow a suspension of industrial action for three to four months to negotiate further.

Qantas' under-performing shares could fall further after the escalation of hostilities with the unions.

"If they are not on a trading halt I would expect them to come under a bit of downward pressure, because it is going have financial impact and there has been a lot of talk about damage to the brand," said Cameron Peacock, market analyst at IG Markets.

Bringing the matter to a head, he said, was understandable.

"It's obviously proved unpopular with people stranded around the globe but in the long-run, and (Joyce) is looking beyond the next week, it's probably the right thing to do."

The lockout is the latest in a tide of industrial unrest as unions press for a greater share of profits amid tight labor markets and a boom in resource prices.

It threatens to become the most significant disruption to Australian aviation since a six-month 1989 dispute that had a significant impact on tourism and other business. Industrial action by engineers cost Qantas around A$130 million in 2008.

Qantas faced angry shareholders and workers at a shareholders' meeting on Friday when the company said the labor dispute since September was costing it A$15 million a week.

Shareholders backed hefty pay rises to Qantas executives, including a A$5 million package for Joyce.

The action sparked an angry response from Transport Minister Anthony Albanese on Saturday.

"I'm extremely disappointed," he said. "What's more, I indicated very clearly to Mr Joyce that I was disturbed by the fact that we've had a number of discussions and at no stage has Mr Joyce indicated to me that this was an action under consideration."

Tony Sheldon of the Transport Workers Union said the lockout was cynical and pre-planned.

"It's a company strategy that shareholders should have been told about, that the Australian community should have been told about, not ambushed in the dead of night," he said.

Massive disruptions

Qantas check-in desks across Australia were largely empty. The airline, which usually flies more than 60,000 people a day, is paying for accommodation and expenses for stranded travelers and putting some on alternative flights.

Australian rival Virgin Australia said it was adding 3,000 seats on its domestic network on Monday, in addition to 3,500 seats on Sunday.

Virgin Australia's airline partners Abu Dhabi's Etihad Airways and Air New Zealand said they were looking at options to increase capacity to and within Australia.

Qantas's decision left many passengers venting their anger after they were stranded in 22 cities around the globe.

"To resolve this at the expense of paying customers on one of the biggest flying days in Australia is quite frankly ... bizarre, unwarranted and unfair to the loyal customers that Australia has," a businessman, who gave his name only as Barry, told Sky TV at Melbourne airport.

This weekend is one of Australia's busiest for travel, with tens of thousands traveling to the hugely popular Melbourne Cup horse race on Tuesday, dubbed "the race that stops the nation."

In Hong Kong, staff at Cathay Pacific Airways were booking Qantas customers on flights bound for Australia.

Shares in Qantas have fallen almost 40 percent this year, underperforming the 8 percent fall in the benchmark index.

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