Qantas is halting work on upgrading the IT systems behind its frequent flyer program as the national airline seeks to cut costs.
The airline is already going through a cost reduction program, which aims to cut AU$2 billion from its bottom line through measures such as 1,000 redundancies and a capital expenditure and structural review.
The IT system in question is Qantas' Profile system. It was rolled out in 1987, written in Fortran, and at the time only designed to handle up to 80,000 frequent flyers. A succession of workarounds had helped it limp along and accommodate its members, now in the millions, until 2009. According to The Australian, Qantas at that time made the decision to overhaul Profile with a new customer relationship management (CRM) system.
It decided to go with Oracle's Siebel CRM in 2010, dropping AU$20 million into the system it calls NewGen.
However, according to the Australian Financial Review, it will cost AU$40 million to complete, and the upgrade, which was meant to have been completed mid last year, is being halted.
Its AU$20 million investment has not been for nothing. Work continued on the upgrade until October this year, ensuring that Profile received some enhancements. Qantas told the Australian Financial Review that despite Profile's age, the work done means that the system is running well, although a new system will be eventually required in the future.
Qantas has had a number of setbacks in the technology space recently. It, despite accumulating 27,000 followers, and its launch of was due to low uptake.
Its recent market update forecasts a loss of AU$250 million to AU$300 million for the second half ending December 31, 2013. The second half of the financial year "remains volatile", according to the airline, with it unwilling to provide any further guidance on its finances.
Qantas CEO Alan Joyce has blamed the global financial crisis, a high Australian dollar, increased fuel costs, and fierce competition from foreignly-financed Virgin Australia as contributing factors to its results.