The International Air Travel Association's (IATA) warning at last week's Beijing meeting that more large air carriers are expected to collapse in the next 12 months may come to pass after more turbulence continues to batter Australian flag carrier Qantas.

On Thursday, Qantas announced that it will shed 36 engineering jobs at the Sydney Airport as part of its consolidation of the bulk of its aircraft maintenance to Melbourne. The axing of the 36 posts comes after Qantas said that it would shed 535 engineering jobs and close one heavy maintenance base.

Actually, 108 engineers were affected by Qantas's move. Most of them were involved in component maintenance of flight boxes and flight control equipment at the Sydney Airport. However, Qantas opened 72 new jobs at its maintenance facility at the Tullamarine Airport in Melbourne, leaving only 36 unemployed.

Qantas is anticipating a 36 per cent decline in component maintenance work within the next three years because of the retirement of older aircraft and replacement with newer jets that require less maintenance.

The Australian Manufacturing Workers Union (AMWU) criticised the move and the threats to their job security.

"For Qantas maintenance workers, it feels like their jobs have boarded an unpiloted, mystery flight with no strategic flight plan programmed in," AMWU National Assistant Secretary Glenn Thompson said in a statement.

However, it would not only be maintenance work that would be placed at risk but the entire air carrier because of the threat to Qantas's lucrative domestic operations posed by the buy-in of Middle Easter carrier, Etihad, into Virgin Australia.

Etihad, fully owned by the Abu Dhabi government, purchased a 4 per cent stake in Virgin Australia in early June and is reportedly planning to further increase its share to 10 per cent. Wary that the expanded Etihad shareholding could eat into Qantas's domestic market share, Qantas Chief Executive Alan Joyce lobbied with the federal government and the Coalition against allowing more Etihad buy-in into Virgin.

"Virgin/Etihad will be able to flood the market with capacity until its competition is forced to significantly reduce its own operations or worse," Fairfax Media quoted a briefing paper from Qantas which wants the Foreign Investment Review Board to curtail Etihad's further entry into Virgin.

Virgin, in its recently complete corporate restructuring, opened its shares to more overseas investors and freed the air carrier from restrictions on foreign ownership. Virgin Australia is 26 per cent owned by the Virgin Group and 19.9 per cent by Air New Zealand. With the restructure, Etihad could acquire 100 per cent ownership of Virgin Australia.

Etihad, like other Middle Easter carriers, is on an aggressive share acquisition mode and recently purchased stocks in Air Berlin, Air Seychelles and Aer Lingus.

In contrast, Qantas stocks plummeted at record-low levels following its warning of a $440-million loss on its international operations. The losing international routes led Mr Joyce to restructure the air carrier by subdividing the company into four, namely, domestic, international, Jetstar and frequent flyers.

IATA members are particularly monitoring the Qantas situation following the recent collapse of older European air carriers due to the stiff competition in the global aviation industry mainly coming from Middle Eastern airlines and high operating costs, particularly soaring jet fuel prices.

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