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The Flying Kangaroo feeling the pressure
Qantas chairman Margaret Jackson told the airline’s AGM today that the airline faces massive challenges including fierce competitors, the cost of managing a heightened security environment and dramatically escalating oil prices, also confirming that the airline’s annual fuel bill is likely to increase by $A1.1b in the current financial year.
She added that while some of the increase will be offset by fuel price hedging and fuel surcharges on passenger tickets, at today’s jet fuel prices, Qantas still faces a shortfall of $A400-500m in this financial year.
The statement today followed a Qantas warning in August that the spiralling cost of fuel would result in current year earnings being lower than the record $A763.6m net profit in the 2005.
”We are confident that accelerating the efficiency process will deliver the savings to help offset the dramatic rise in fuel costs,” said Jackson adding that the airline has doubled its annual cost savings target to $A3.0 over the five years to 2008, from the three year target of $A1.3b outlined in 2003.
Jackson added that Qantas also faces fierce and unrelenting competition from airlines that are propped up by governments and taxpayers, adding that the inequities are massive.
While she added that the company is evaluating opportunities for international expansion of its low cost domestic carrier, Jetstar, which was established last year, she did not confirm the industry anticipated international expansion for the low cost carrier.
Graham Muldoon
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