Qantas Airways is cutting capacity and jobs to cope with the impact of rising fuel prices and the recent natural disasters in Japan, New Zealand and Australia.
In an announcement today, CEO Alan Joyce said there would be a reduction in domestic and international capacity, retirement of aircraft, reduction of management positions and ongoing fuel surcharges.
“The significant and sustained increases in the price of fuel is the most serious challenge Qantas has faced since the Global Financial Crisis,†he said.
“The price of Singapore Jet Fuel has risen from around US$88 per barrel in September 2010, to more than US$131 per barrel today. Qantas fuel costs for the second half of FY11 will be $2.0 billion.
“There has never been a time when the world faced so many natural disasters, all of which have come at a significant financial cost to the Qantas Group.â€
He warned that the group’s second half profits would be hit by the events, including the grounding of its A380 fleet following problems with the Rolls-Royce engine.
He estimated that the recent natural disasters – the Queensland floods, cyclones, the Christchurch earthquake and the Japanese earthquake and tsunami – would cost $140 million in total.
“We want to limit redundancies wherever possible and will be using a range of initiatives to manage the reduction in capacity including annual and long service leave. At this stage only management positions will be made redundant,†said Joyce.
Its subsidiary, Jetstar, has also increased fares and its ancillary revenues, including baggage charges on some domestic and international routes.
By Bev Fearis
