Qantas has announced it will cut 5000 full-time jobs, extend wage freezes and scrap under-performing flight routes as part of a plan to reduce costs by $2bn over three years.

It has posted an underlying loss before tax of $252m for the last six months of 2013, as the Abbott government considers potential assistance for Qantas, which has complained about an “uneven playing field” in the airline industry.

The opposition leader, Bill Shorten, said the “truly devastating” job cuts represented the worst day in Australian aviation since the collapse of Ansett.

The Transport Workers’ Union national secretary, Tony Sheldon, raised the prospect of strike action unless the government worked with the airline to find ways to avoid the job losses. “But if [the treasurer] Joe Hockey’s not prepared to do that, then it’s industrial action that the workforce should be considering,” Sheldon said.

Australia’s national airline cited a “deterioration in business performance and operating environment” for the need to reduce full-time-equivalent positions by 5000, including 1000 job cuts flagged in early December. More than 50 aircraft would be deferred or sold.

Chief executive Alan Joyce said the company would accelerate its “Qantas transformation program” to achieve $2bn in cost reductions by the 2016-17 financial year. He said he regretted the need for the job losses and they were not a reflection on the performance of hard-working Qantas employees.

“Hard decisions will be necessary to overcome the challenges we face and build a stronger business,” Joyce said, flagging talks with unions on Friday.

“There are many examples of Australian companies that have failed because they have not been prepared to make the hard decisions. Qantas is not one of them.”

Qantas said the 5,000 full-time equivalent positions across the group would incur about $500m in redundancy costs across the financial years 2013-14 and 2014-15.

This would include a reduction of management and non-operational areas by about 1,500 full-time-equivalent positions and the loss of operational positions affected by fleet and network changes. Joyce said every aspect of the company would be affected.

Unions complained about a lack of consultation, arguing the cuts would deepen Australia’s “jobs crisis”.

Qantas had already implemented a wage freeze for executives but now wants to extend this to all Qantas Group employees.

The company said it would freeze wages until the Qantas Group made a full-year underlying profit – a move that would be ongoing for executives, immediate for open enterprise bargaining agreements (EBAs) and proposed for other EBA-covered staff.

Line maintenance operations and catering facilities would also be restructured, including the previously announced closure of the Adelaide catering centre. Qantas would proceed with its previously announced closure of the Avalon maintenance base.

Qantas said it would exit underperforming routes and make aircraft changes on certain routes to better match capacity to demand. This would include withdrawing Qantas International from the Perth-Singapore route and operating all Sydney-Singapore and Brisbane-Singapore services with A330-300s from later this year.

Qantas said it would adjust the timing of services between Melbourne and London to reduce A380 ground time in Heathrow, but the overall capacity on this route would not change.

Qantas shares fell about 7.5% to $1.17 in morning trade.

The government has been considering providing Qantas with an emergency debt guarantee, despite unease from some senior ministers and Liberal backbenchers. Virgin has argued a debt guarantee would give Qantas a “leg-up” worth at least $100m a year and would amount to “picking winners”.

It is understood the government’s preferred course of action would be to remove government-imposed restrictions, including on the level of foreign ownership, set out in the Qantas Sale Act. But the prospects of getting such changes through parliament are murky.

Joyce said Labor and the Greens had indicated they would not support changing the Qantas Sale Act, meaning such legislation was unlikely to pass before the new Senate takes effect in July. He noted the Palmer United party, which will have a powerful role in the new Senate, had also signalled its opposition, indicating no changes to the act were realistic in the short term.

Joyce said Qantas could compete “in any fair fight” and he would continue discussions with the government about levelling the playing field.

“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to Australian bilateral flying rights. Late last year, these three foreign-airline shareholders invested more than $300m in Virgin Australia at a time when, as Virgin Australia reported to the ASX on 6 February, it was losing money,” Joyce said.

Shorten accused the government of not acting quickly enough to spell out its clear plans to assist Qantas, having known of the need for action since 6 December.

“That the Abbott government has done nothing to try and fight for Australian jobs at Qantas, like they failed to do anything for Australian jobs in other closures announced, is truly alarming,” he said.

The secretary of the Australian Council of Trade Unions, Dave Oliver, said the 5000 workers had been dealt a major blow through no fault of their own.

Oliver said the company’s business plans were focused on “managing decline and not necessarily going for growth”.

“Today’s announcement further plunges Australia into a jobs crisis,” he said. Oliver said the government’s calls for Qantas to get its house in order were code for job cuts.

He said a repeal of the Qantas Sale Act would lead to further outsourcing and job losses but unions would support “some form of debt guarantee”. Such a guarantee should be conditional on a commitment to maintaining Australian jobs, Oliver said.