November 1st, 2011
07:39 AM GMT
(CNN) - The Flying Kangaroo, with its distinctive cherry red background that adorns the tail of Qantas airplanes, is an Australian icon.
It has a special place in the hearts of Australians.
Over the decades countless thousands of young travelers with a backpack and a Lonely Planet travel guide, or seekers of fame and fortune, have started their adventures on a Qantas flight. And when it's all over, Qantas has taken them back home again.
The 1980s movie Rain Man, starring Dustin Hoffman, cemented the airline's outstanding safety record for a generation of movie-goers. It has been a reputation that Australians have been justifiably proud of.
But Qantas is currently struggling in the globalized, deregulated world of air travel.
Compared with a new generation of rivals, particularly from Asia and the Middle East, its profitability is sinking on its international routes. Earnings are now propped up by the group's domestic operations or its low-cost carrier Jetstar.
Alan Joyce, the combative Qantas CEO, says international operations lose about $200 million dollars a year because costs are about 20% higher than rival carriers.
He says to survive he is cutting the overseas operations of the airline and launching two brand new airlines based in Asia, where staffing costs are much cheaper.
About 1,000 jobs out of 35,000 will go in Australia. The unions claim this outsourcing could ruin the airline's safety record and they have taken industrial action to protest and protect jobs.
The increasingly bitter relations between management and unions culminated in a 44-hour grounding of the whole Qantas fleet, disrupting passengers around the world.
The reason for the shock move, which caught even Prime Minister Julia Gillard by surprise, was that the unions were preparing to continue their low-level industrial action for another year.
But by confronting the unions head on with a lockout, Joyce has also created new uncertainties about Qantas reliability.
Has the action by Joyce destroyed the brand, as the unions are warning, or will loyal passengers put it behind them?
It's too early to tell. But as Qantas heads ever deeper into the crowded competitive skies of Asia, brand loyalty will become ever more important. Something that now hangs in the balance at Qantas.
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