The pandemic saw the airline’s ground handling work outsourced.
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The Qantas Airways Ltd (ASX: QAN) share price has slipped into the red in afternoon trading, down 2.41% to $5.66 per share.
This comes as the S&P/ASX 200 Index (ASX: XJO) has also given up its earlier gains to currently be down 0.2%. It also comes amid news that the full Federal Court today found the airline in breach of the Fair Work Act, dismissing its attempt to overturn an earlier court ruling.
The breach in question relates to Qantas outsourcing of ground handling functions during the global pandemic. The layoffs of its ground handling crews drew the ire of the Transport Workers Union (TWU), which initiated the legal action.
Airline to appeal the ruling
In a statement today, Qantas said it intends to appeal the judgement to the High Court.
According to the airline, “Qantas has always said the decision to outsource our ground handling function was based on lawful commercial reasons in response to the unprecedented impact of the COVID crisis.”
It also noted that even before the onset of the pandemic, it had outsourced ground handling in 55 of the 65 Australian airports it operates from.
Qantas said there were three reasons why it had to outsource the remaining ground functions following the “massive impact of the COVID crisis”.
First, it cited potential annual savings in excess of $100 million per year from employing specialised ground handling companies. It said the savings were needed to help recover from the COVID impacts.
Second, Qantas said outsourcing eliminated the requirement to spend $80 million over five years on ground handling equipment.
And third, outsourcing enabled the airline to better match resources with fluctuating levels of demand.
“Today’s judgment does not mean Qantas is required to pay compensation or penalties,” the company stressed. “We will be asking the Court to stay any further hearings on this issue until after the High Court process.”
Qantas share price snapshot
Despite today’s retrace, the Qantas share price remains up 13% so far in 2022. That compares to a year-to-date loss of around 2% posted by the ASX 200.
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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.