Qantas Looks To Centralize Its Head Offices

Australian airline Qantas sent the commercial realty sector in Sydney into meltdown this morning. The airline indicated it was conducting a group-wide property review of its leased spaces, particularly its corporate offices. Under review was Qantas’ 49,000 square meter headquarters near Sydney Airport. Raising even more eyebrows, the Sydney-centric airline suggested it was open to moving its HQ away from the city.

Qantas is contemplating quitting its Sydney HQ to save costs. Photo: Getty Images

Qantas wants to save money on its office leases

Currently, the movers and shakers at Qantas work out of a pleasant but functional set of buildings on Bourke Street in the Sydney suburb of Botany. It’s not exactly a glamorous address, but it is close to Sydney Airport.

Qantas leases this space and says it spends nearly US$30 million annually on leased office space. It wants to reduce that spend. Also on Qantas’ radar is Jetstar’s leased office in the inner Melbourne suburb of Collingwood. Jetstar is a wholly-owned subsidiary of Qantas.

“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,” said Chief Financial Officer for the Qantas Group, Vanessa Hudson today.

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Qantas Chief Financial Officer Vanessa Hudson. Photo: Qantas Newsroom

Another ‘rightsizing’ announcement from Qantas

Today’s announcement follows a series of “rightsizing” moves by Qantas. They come on the back of a torrid year for the airline and a recent annual loss of almost US$2 billion. Some 6,000 Qantas workers will lose their jobs. This includes the well-regarded CEO of Qantas International, Tino La Spina.

Also facing an uncertain future are 2,000 ground handlers directly employed by Qantas. The airline wants to outsource ground handling operations to cut costs.

There have also been some recent under the radar moves, such as axing the dedicated support team for Qantas’ blue-chip Platinum One frequent flyers.

Qantas HQ in Bourke Street near Sydney Airport. Photo: MDRZ via Wikimedia Commons

Now Qantas is looking at its office leasing costs. In classic Qantas style, rather than quietly canvassing their options, the Qantas c-suite crowd put out a press release and began giving media interviews. All options were on the table, including an interstate relocation of Qantas HQ.

State politicians up and down Australia’s east coast began putting up their hands, saying what a lovely town their particular state capital city was.

“We’re keen to engage with state governments on any potential incentives as part of our decision making,” said Ms Hudson.

Given how many of these State politicians have caused chaos at Qantas by closing borders, one could picture this as a big payback-joke at Qantas HQ. Qantas wouldn’t seriously ditch Sydney as its HQ, would they?

Qantas unlikely to leave its Sydney base

The airline has a long association with the city, and Sydney Airport is the number one Qantas hub. The majority of Qantas’ top managers and directors are firmly ensconced in Sydney with comfortable homes close to the harbor. Not to mention the thousands of remaining Qantas employees working out of the Bourke Street HQ. How many of them want to move to, say, Brisbane?

More likely today’s stunt, and that is precisely what it is, is designed to put downward pressure on future lease negotiations at the existing HQ. Sure, extraneous leased office spaces around the place can get consolidated. But the prospects of Qantas packing up its HQ and moving to another city are remote. The airline says it will spend three months looking at the options before starting to make any decisions.