National carrier Qantas (ASX: QAN) has announced further cost cuts to stay airborne during the pandemic, flagging plans to potentially exit its 49,000sqm Mascot, Sydney headquarters as well as Jetstar's head office in Collingwood, Melbourne.
Following last month's announcement the airline would outsource ground staff jobs to save $100 million, the group now aims to reduce its current $40 million annual spend on leased office space.
The company is undertaking a three-month property review of its corporate offices and non-aviation locations, which may result in several facilities being brought together in one state.
Qantas' management claims the review flows from job losses already announced and the need for more efficiencies, although there is no intention to offshore facilities as a result of the review.
Some aviation facilities will also be considered for possible relocation, such as flight simulator centres currently in Sydney and Melbourne as well as Qantas' heavy maintenance facilities in Brisbane; particularly if an opportunity arises to bring some or all of these facilities under the one roof in Australia.
Qantas Group chief financial officer Vanessa Hudson says like most airlines, the ongoing impact of COVID-19 means Qantas will be a much smaller company for a while.
"We're looking right across the organisation for efficiencies, including our $40 million annual spend on leased office space," she says.
"As well as simply rightsizing the amount of space we have, there are opportunities to consolidate some facilities and unlock economies of scale. For instance, we could co-locate the Qantas and Jetstar head offices in a single place rather than splitting them across Sydney and Melbourne.
"Most of our activities and facilities are anchored to the airports we fly to, but anything that can reasonably move without impacting our operations or customers is on the table as part of this review. We'll also be making the new Western Sydney Airport part of our thinking, given the opportunity this greenfield project represents."
She claims the review will help set up Qantas for the long term with recovery from the COVID-19 crisis, and the group is "open minded" about the outcome.
"It's possible that our HQ stays where it is but becomes a lot smaller, and other facilities consolidate elsewhere," she says.
"Or we could wind up with a single, all-purpose campus that brings together many different parts of the Group. These are all options we need to consider as we look to the future.
"The Qantas Group will remain one of the country's largest employers and a major generator of economic activity, so we're keen to engage with state governments on any potential incentives as part of our decision making."
To assist with the first phase of consolidation, Colliers International has been appointed to sublease about 25,000 square metres of surplus office space across Mascot, Melbourne CBD and Hobart. A lease on a 230 square metre Sydney CBD office that is due to expire in October will not be renewed.
Updated at 10:44am AEST on 15 September 2020.
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