Qantas boss Alan Joyce said the airline would be forced to lay off 1,000 employees as he announced plans to launch new airlines in Asia and Japan this morning.

Mr Joyce said the airline would have to make hundreds of employees redundant, including management, pilots, cabin crew, engineering staff and airport administration staff.

And he warned that the changes, which included delaying delivery of some of the airline's Airbus A380, were vital if Qantas was to carry out the "fundamental change" needed to ensure its survival.

The company is planning to launch a new Asia-based premium airline which will not carry the Qantas brand, although a location for the new carrier has not yet been decided.

It is also launching Jetstar Japan in cooperation with Japan Airlines and Mitsubishi.

The new low-cost carrier is expected to commence domestic operations in Japan by the end of 2012 and international services within a year.

The announcement brought a swift reponse from unions representing Qantas engineers and pilots.

The ACTU called the announcement "one of the darkest days in the airline's history", accused Qantas management of displaying a "blatant contempt" for its workforce, and said the move raised questions about whether it could still portray itself as an Austalian airline.

The aircraft engineers union said it would consider taking legal action against the airline while the Australian and International Pilots Association accused Mr Joyce of having "no belief" in the Qantas brand.

Qantas changes 5-year plan to return Qantas International to profitability

5-year plan to return Qantas International to profitability 1,000 jobs to be cut under restructure of international arm

1,000 jobs to be cut under restructure of international arm Strengthening ties with LAN, Malaysia Airlines, South African Airways and BA

Strengthening ties with LAN, Malaysia Airlines, South African Airways and BA Jetstar Japan will launch domestic Japanese services by end of 2012

Jetstar Japan will launch domestic Japanese services by end of 2012 Delaying delivery of some Airbus A380s and ordering 110 new A320s

Delaying delivery of some Airbus A380s and ordering 110 new A320s Creating premium airline based in Asia, not under Qantas brand

Creating premium airline based in Asia, not under Qantas brand Santiago to replace Buenos Aires as entry point to South America

Qantas will save $2.3 billion by retiring some of its Boeing 747 airliners and putting Airbus A380s on hold, but will order more of the smaller Airbus A320s which are more suited for shorter-haul flights.

Mr Joyce warned that massive change was needed in the international division to keep the airline profitable.

He said it could not continue to be subsidised by the dominant 65 per cent market share Qantas and Jetstar enjoy in the Australian domestic market.

Warning that the airline has to compete against many government-subsidised Middle Eastern and Asian carriers, he said it now carried only 18 out of every 100 passengers leaving Australia.

'New spirit'

Qantas took out wraparound ads heralding its 'new spirit' in today's papers ( ABC News )

Qantas trailed the announcement with wraparound ads in today's newspapers hailing its "new spirit", and Mr Joyce described the carrier as a "great airline with a proud history."

"But it is suffering big financial losses and a substantial decline in market share. To reverse that decline we need fundamental change.

"Qantas International takes up enormous amounts of capital, and our cost base is around 20 per cent higher than that of our key competitors. To do nothing, or tinker around the edges, is not an option."

Mr Joyce said the first aim was to return Qantas International to profitability in the short-term, with increased partnerships, putting six A380s on hold, and retiring four Boeing 747s to reduce capital and operational costs.

Qantas will make room to retire the 747s by cutting its Bangkok and Hong Kong to London services, with passengers instead connecting to Europe on British Airways.

Qantas will still operate the Bangkok and Hong Kong to Sydney legs.

Mr Joyce said the Kangaroo (Australia-London) route was iconic and said Qantas would continue to fly to London via Singapore.

He said the airline would also maintain its trans-Pacific routes to the US, the Johannesburg route, and flights to South America arriving in Santiago rather than Buenos Aires.

In the longer term, the company says its new non-Qantas branded premium Asian-based airline is an attempt to capitalise on the growth potential in the region before its global competitors take the opportunity.

"We need to act now because our competitors are circling these opportunities, and there is probably only a brief window to establish a leading aviation position in this market," Mr Joyce said.

Angry reaction

Qantas says 90 per cent of its 35,000 staff are based in Australia, so the job losses will constitute 3 per cent of the airline's Australian workforce.

But Australian Licensed Aircraft Engineers Association secretary Steve Purvinas said the move could effectively breach the Qantas Sale Act, which called for the airline to keep the majority of its facilities in Australia when it was privatised.

"The move to open up a new premium airline in Asia is clearly a step by the airline to avoid its obligations under the Qantas Sale Act," he said.

"In due course we'll make a decision on whether we should take Qantas to the federal court for breaching the Qantas Sale Act."

Australian and International Pilots Association (AIPA) president Barry Jackson said the announcement marked a sad day for the Australian airline industry.

"The Federal Government needs to look very carefully at the implications of Alan Joyce's announcement today for the Australian public," he said.

"Strip away the spin and the eye-watering amount spent on advertising this morning and what's left is exactly what Qantas pilots have been warning of for months: a shift of Australian Qantas operations into Asia to start employing people working to Asian conditions and standards.

"The Qantas Sale Act was established when Qantas was privatised to prevent a CEO like Alan Joyce from doing something like this, because it is not in the interest of Australia or Australians.

"We have seen this management style of an Australian icon before, when Sol Trujillo took the reins at Telstra. It didn't work then and it won't work now.

"The key strength of the Qantas brand is the safety culture, training and experience of Australian-based Qantas pilots, any reduction in standards in these areas would prove fatal to the airline. After all, what is Qantas selling to Asia if not the world-leading reputation of its pilots and crew?"

Treasurer Wayne Swan said he wanted to see evidence that staff will be protected under the plan.

"The most important thing here, most immediately for those workers involved and those companies, is that those companies look after their workers and do the very best for their workforce in the circumstances in which they find themselves," he said.