Jetstar to cut capacity, may sell planes as pilot dispute drags on

SYDNEY - Budget airline Jetstar is cutting domestic capacity by around 10 per cent in January and weighing the sale of three Boeing 787-8 jets to counter industrial action by its pilots that it expects will cost it up to A$25 million (S$23 million).

Members of Jetstar's main pilot union made two four-hour work stoppages on Dec 14 and 15 following a failure to agree a pay deal with management.

The union also has a range of lower-level bans in place until Friday but has ruled out taking action over the Christmas and New Year holiday periods.

The Qantas Airways subsidiary said yesterday the financial impact of disruptions by pilots and ground staff was estimated to be around A$20 million to A$25 million.

"There's no doubt that industrial action is expensive and frustrating, but we have to hold the line on costs or it threatens the long-term sustainability of our business," Jetstar Group chief executive Gareth Evans said.

The Australian Federation of Air Pilots (Afap), which represents more than 80 per cent of Jetstar's pilots in Australia, said there were no plans for industrial action beyond Friday. It hoped Jetstar will schedule meetings and resume negotiations towards reaching a fair deal.

Jetstar said a business case had developed to sell three of its 11 787-8s that were plying loss-making international routes, with the capital to be reinvested in other parts of the Qantas Group or returned to shareholders.