Qatar Airways has launched an ambitious 'Cost Transformation' initiative that it hopes will lay the ground for a sustainable platform for profitable growth, but at the same time could result in slashing of workforce, its top executive has said.
In a letter to the airline's employees on February 23, CEO Akbar Al Baker said 'the aim of the Transformation is to make Qatar Airways 'fit for the future' by simplifying business and "distance ourselves from legacy ways of working; we have created many roadblocks that prevent us from adding value to your business and our customers".
He also said that this 'transformation will include a recalibration of our workforce requirements and a likely reduction in our headcount".
While Al Baker didn't specify or comment on the number of job cuts, he reiterated that the 'resources freed up in this process will be reinvested' into the airline.
The Doha-headquartered airline, which along with other Middle-East carriers has dominated the global aviation industry in the last few years, has around 45,000 employees on its rolls.
The communication from the airline's top executive comes after Qatar Airways announced losses of more than $600 million in the 2019 financial year.
The recent outbreak of coronavirus in China has also severely impacted the global aviation business, with industry organisation IATA putting the total estimated loss at nearly $30 billion. The virus has spread to other regions in the world, including Iran, where Qatar Airways has curtailed its flights.
The state airline of Qatar had also been hurt by the restrictions imposed by nearby countries, including Saudi Arabia and the UAE, since 2017.
The setbacks though hadn't stopped Al Baker from expanding the airline's network. Qatar Airways, which had signed a code share agreement in IndiGo late last year, renewed its agreement with American Airlines, earlier this week.
The Transformation was needed, added Al Baker, because 'our rapid growth has sometimes been achieved at the expense of our efficiency and organisational performance.'
Moneycontrol, which has seen the letter, wrote to the airline for a response. The story will be updated as soon as the Doha-based carrier responds.
Following is the full text of the letter:
After many years of strong growth, today Qatar Airways has a position of leadership in the aviation industry. Confirmed by our long standing 5-Star Airline status and multiple industry awards, we are the worldwide benchmark for superior standards of service. Despite the recent geopolitical crisis, our fleet, passengers and cargo volumes put us in the top tier of carriers, not just in the region but also globally. This has been achieved first and foremost thanks to the contribution and effort of all our employees. For this, am thankful to all of you.
It also true, however, that our rapid growth has sometimes been achieved at the expense of our efficiency and organisational performance. Too many of our internal processes have become too cumbersome resulting us rarely being in a position to match the superior quality of our product with the agility needed to deliver it efficiently. More concerning, we often leave money on the table in our interactions with our suppliers.
For this reason, I have decided to launch a Cost Transformation initiative: this will focus on our passenger and cargo activities, and cover all internal processes from Operations to Admin. The objective is to enable us to work better, smarter and with an even stronger focus on the quality of the service we deliver to our customers - while supporting a sustainable return to profitability. We are already the best airline in the world and we operate the best airport in the world; our next goal is to lay the foundation towards a sustainable platform for profitable growth.
The target is Transformation of our Company into an organisation fit for the future: we must simplify our business, and distance ourselves from legacy ways of working ; we have created many roadblocks that prevent us from adding value to your business and our customers. We must critically re-examine anything that stands in our way of being the very best we can be, from our position of Employer of Choice for the talent in the industry, to working more effectively with suppliers or building stronger relationships with our customers.
As we streamline the company, this Transformation will include a recalibration of our workforce requirements and a likely reduction in our headcount. I want to emphasise that the resources freed up in this process will be reinvested in the development of our people and in the technology needed to support our future growth, making us an even stronger global airline.
This critical project for Qatar Airways will be led by our Transformation and Strategy team, headed by Thierry Antinori (CO-ST) with the close cooperation of finance, also providing invaluable support will be Daniel Ho (CFO-QR) and Guillaume Halleux (COC). They will be supported by an external team of consultants, with years of experience in efficiency programs in the aviation industry. I will, of course, take a leading role in this crucial project for the Company. I thank you in advance for putting your trust in the team that will manage the initiative. I encourage you to share your views and ideas on how we can better streamline our processes at XXXXXXX@XXXXX. Your engagement and experience of what works and what needs to improve is the best base to build, together, a better Qatar Airways.