Qantas has grounded its entire fleet and is locking out its staff in response to unions' industrial action.

The airline is fighting with its pilots, ground staff and engineers over pay, conditions and the outsourcing of jobs overseas.

In a shock move, Qantas boss Alan Joyce announced today all domestic employees involved with the dispute will be locked out as of 8pm (AEDT) Monday, but the fleet would be grounded immediately.

Both the international and domestic fleet have been grounded indefinitely.

"We are locking out until the unions withdraw their extreme claim and reach an agreement with us," Mr Joyce said.

"It's an unbelievable decision, it's a very hard decision ... we have no alternative. This is the fastest way to ensure the airline gets back in the air."

Qantas situation at a glance: Fair Work Australia (FWA) rules to terminate Qantas industrial action

Fair Work Australia (FWA) rules to terminate Qantas industrial action Qantas to resume flights from mid afternoon on Monday

Qantas to resume flights from mid afternoon on Monday Backlog could take at least 24 hours to clear

Backlog could take at least 24 hours to clear All domestic and international flights were grounded on Saturday

All domestic and international flights were grounded on Saturday Lockout of staff was to commence Monday morning

Lockout of staff was to commence Monday morning Qantas says 68,000 passengers affected worldwide

Qantas says 68,000 passengers affected worldwide 447 flights were cancelled worldwide

447 flights were cancelled worldwide Qantas is organising alternative flights and accommodation for stranded passengers, and refunds for people yet to travel.

Qantas is organising alternative flights and accommodation for stranded passengers, and refunds for people yet to travel. The Federal Government was only informed of Qantas' plan hours before it was announced.

The Federal Government was only informed of Qantas' plan hours before it was announced. Hotline for affected Qantas passengers: 13 13 13

Hotline for affected Qantas passengers: 13 13 13 Qantas updating passengers via its website, Facebook and Twitter

Qantas updating passengers via its website, Facebook and Twitter QantasLink and Jetstar are continuing to operate flights

Mr Joyce said his hand had been tipped by the impossible demands of three unions.

"They are trashing our strategy and our brand," he said.

"They are deliberately destabilising the company and there is no end in sight."

The move comes as a result of a long-running industrial impasse between Qantas and three unions: the Australian and International Pilots Association (AIPA), the Transport Workers Union (TWU) and the Australian Licenced Aircraft Engineers Association (ALAEA).

Mr Joyce said if the industrial action continued, Qantas would have no choice but to shut down its business "part by part".

QantasLink and Jetstar will not be grounded.

The Qantas dispute is expected to go before the industrial relations commission tonight.

Government concerned

The Federal Government was told about Qantas' plan for the first time this afternoon.

Transport Minister Anthony Albanese has expressed frustration, saying the Government is extremely concerned about the future of Qantas, its workforce, and also the travelling public.

Mr Albanese says he is disappointed by Qantas' decision "made on a Saturday morning with notice to the Government mid-afternoon, one day after an annual general meeting."

"I would hope the parties to this dispute act like adults," he told a press conference this afternoon.

"[The Government] remains of the view, that with a little bit of commonsense and acknowledgment that there is a common interest between management and employees a solution can be found."

Mr Albanese says the Government played a role in facilitating discussions between Qantas and the employees, but at no stage has there been a request for government intervention.

He says the Government will be making an application to Fair Work Australia over the dispute.

The TWU has slammed Qantas' decision to ground its entire fleet and lockout its staff as "reckless, unwarranted and disgraceful".

The aircraft engineers union says it is not surprised Qantas would take such extreme action as grounding its fleet and locking out workers.

"I think this is an extreme measure for the CEO and airline to take given we've cancelled our industrial action for the next three weeks," ALAEA federal secretary Steve Purvinas said.

Refunds, ticket transfers

Mr Joyce said he was sorry the course of action had become necessary but the ball was now in the unions' court.

"They must decide just how badly they want to hurt Qantas, their members ... and the travelling public," he said.

The airline said at 5pm (AEDT) on Saturday there were 64 aircraft in the air, 36 domestic and 28 international carrying more than 7,000 passengers.

In total 108 aircraft will be grounded in 22 airports around the world.

The airline will offer hotel accommodation and alternative flights to those who are mid-journey and cannot get home when the grounding takes effect.

And there will be refunds and ticket transfers available to passengers whose flights are cancelled.

Qantas will keep passengers updated on the situation via its website, Facebook page and Twitter.

The airline says 13,305 passengers are booked to travel on Qantas planes from overseas ports to Australia in the next 24 hours.

About 1,310 international passengers may be at international airports now waiting for their flight to depart.

Sorry, this video has expired Passengers stranded as Qantas grounds flights ( Debora Rice )

Passengers stranded

Qantas passengers at airports around the world are scrambling to find accommodation or flights with other airlines.

"I just can't believe that they're doing it to be honest. I'm at a loss," one traveller said.

"I'm a bit annoyed, especially when Mr Alan Joyce got his big pay rise yesterday," another passenger said.

International leaders and delegates in Perth for the Commonwealth Heads of Government Meeting (CHOGM) are among those whose travel plans have been thrown into disarray by the Qantas grounding.

A Greens staff member, Tim Hollo, was on board a Qantas aircraft when the grounding happened.

He says the captain told passengers he did not know what was happening.

"Eventually he said 'still don't know what's happening but you can turn your mobile phones on while we wait'," he said.

"A few of us on the plane switched on Twitter and found out that Mr Joyce had grounded the entire fleet, shortly afterwards the captain told us to get off and wait.

"And about 20 minutes after that they told us all to leave the airport because there weren't going to be any flights."

Qantas is urging passengers affected by the grounding of its flights over the next 24 hours to call 13 13 13 for assistance.

Sorry, this video has expired Aviation writer discusses Qantas grounding ( Jeremy Fernandez )

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