Qantas has broken a deadlock on marathon wage negotiations with its domestic pilots, clearing the way for negotiators to hammer out a deal with international pilots which is holding up its ultra-long haul “Project Sunrise” ambitions.
The airline is confident its largest pilot group will back the new pay deal reached on Friday after more than a year-and-a-half of negotiations.
The circuit-breaker comes as disputes with pilots and ground crew in its Jetstar business boil over into industrial action which has caused hundreds of flight cancellations.
Market watchers have raised concerns that demands from Qantas’ workforce for a bigger share of its improved profitability could put upward pressure on its cost base.
A Qantas spokesman said an in-principal agreement with the Australian and International Pilots Association for a new enterprise bargaining agreement included 3 per cent annual wage increases, and would be put to a vote by pilots in January.
“This demonstrates we are prepared to reach new agreements which reward our people and ensures the ongoing competitiveness of our business,” he said.
“This also shows how unreasonable the demands are from unions representing Jetstar pilots and baggage handlers.”
Negotiations with pilots in Qantas’ domestic network — the group’s largest and most profitable segment — have dragged on since March 2018. Short-haul pilots voted down an earlier proposed agreement in September.
AIPA’s influential committee of management did not endorse that earlier proposal but has backed the revised deal, which means its members are far more likely to vote in its favour.
“The majority of the short-haul members of the committee said that pilots should seriously consider accepting the proposal when it comes to a vote,” AIPA president Mark Sedgwick said on Sunday.
Settling the short-haul EBA means company and union negotiators can turn their attention to the long-haul pilot EBA. Qantas says it must finalise that deal early next year if it is to place an order for up to 12 new Airbus 350-100s to operate non-stop flights from Australia’s east cost to London and New York.
Qantas had intended to make a decision on whether or not to launch these “Project Sunrise” flights by the end of 2019, but pushed back that deadline by three months because it has not reached a pilot pay deal.
Airbus is holding delivery slots for Qantas until March for its potential order of about $3 billion of new aircraft. Qantas wants to launch what will be the world’s longest commercial flights in the first half of 2023.
The airline is pushing for pilot “productivity improvements” which it says are needed make the Sunrise business case stack up. However, AIPA has said Qantas’ productivity targets are difficult to achieve so soon after pilots made significant concessions in a 2015 deal which was tied to the introduction of Boeing 787s to the fleet.
Jetstar pilots and ground crew went on four-hour strikes earlier this month — the first industrial action at the Qantas group since the historic grounding of 2011.
The airline says these workers’ demands equate to a wage increase of up to 15 per cent. However their unions say they only want 3 and 4 per cent wage increases and that Jetstar has over-inflated the cost of requested conditions and allowances.
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