Five thousands jobs are being axed as Qantas takes drastic action to save A$2 billion in costs over three years.
More than 50 aircraft are to be sold or orders deferred and expenditure slashed by A$1 billion.
The “unprecedented” action will take place through to 2017 as Qantas faces intense competition from Virgin Australia on domestic routes.
The cuts came as Qantas revealed losses of A$252 million in the half year to December, described by chief executive Alan Joyce as “unacceptable and unsustainable”.
Qantas will withdraw from underperforming routes over the next 12 months and make changes to aircraft on others to better match capacity to demand.
Flights between Melbourne and London will be re-timed in November to reduce Airbus A380 ground time at Heathrow. However the airline does not plan changes to capacity on London services.
The 5,000 job cuts will include 1,500 management and non-operational roles and a pay freeze for executives imposed in December will be extended to all staff.
The airline will employ more than 27,000 people after the jobs cull.
Announcing the half-year losses, Joyce said: “Qantas has been undertaking its biggest ever transformation over the past four years, cutting comparable unit costs by 19%, but this is not enough for the circumstances we face now.
“With structural economic changes being exacerbated by the uneven playing field in domestic aviation, we must now take actions that are unprecedented in scope and depth.
“We will accelerate our Qantas transformation program to achieve $2 billion in cost reductions by FY17. Hard decisions will be necessary to overcome the challenges we face and build a stronger business.”
Outlining the latest wave of cuts, Joyce said: “It’s clear that the market Qantas operates in has changes, with structural economic shifts exacerbated by an uneven playing field in Australian aviation policy.
“Comprehensive action is needed in response. Qantas’s competitors have increased capacity to Australia by 46% since 2009, more than double the world average, at a time of record fuel costs and economic volatility.”
He claimed that the Australian domestic market had been “distorted” by current policy, “which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights”.
Joyce added: “We have already made tough decisions and nobody should doubt that there are more ahead.
“Over the next three years, we aim to secure our strong group domestic position and maximize Qantas International’s competitiveness.”