While previous studies indicate the commercial benefits for airlines from either ‘high road’ or ‘low road’ employment relations approaches, there is limited evidence of success among organisations utilising a ‘hybrid’ model involving differentiated arrangements with different workforce segments. In analysing the processes and outcomes associated with strategic change at Qantas Group, this article examines the reasons why organisations adopt hybrid employment relations arrangements and the outcomes associated with this approach. Drawing upon the strategic negotiations and employment subsystems frameworks, we find that hybrid strategies emerge under the influence of product market pressures and institutional forces. In the Qantas Group case, these factors combined to inhibit the capacity of management to pursue either low road or high road strategies, resulting in differentiated and fragmented arrangements. The case highlights the potential risks of hybrid employment relations strategies for worker commitment, workplace conflict and organisational performance, with implications for human resource management scholarship and practice.