SYDNEY - Embattled Australian flag carrier Qantas said Monday it will axe 500 jobs in its heavy maintenance and engineering operations as part of a restructuring to help slash costs.

The move follows an 83 per cent slump in first-half net profit in the six months to December and an announcement it would delay the delivery of two A380 superjumbos by three years as part of spending cuts.

In the reorganisation, Qantas will cease heavy maintenance at Tullamarine in Melbourne by August, with work being consolidated in Avalon, another facility near the Victorian state capital, and Brisbane.

Of the 500 jobs cut, which were signalled in the profit announcement in February, 422 will be lost at Tullamarine, while 113 will go at Avalon.

A total of 35 new positions will also be created.

Chief executive Alan Joyce said there was not enough work for three separate facilities.

"Like the manufacturing industry, aviation maintenance is a labour and capital intensive sector. Our cost base in heavy maintenance is 30 per cent higher than that of our competitors," he said.

"We must close this gap to secure Qantas' future viability and success."

Qantas has been struggling with high fuel costs which have eroded profits, as well as Joyce pulling all Qantas planes out of the skies for 48 hours last October as part of a row with staff.