Qantas will cut 1000 jobs and issued a grim profit warning
following a "marked deterioration" in trading conditions in
The airline says it expects to report an underlying loss of
between A$250 million ($275 million) and $300 million for the
six months to the end of the year.
Qantas chief executive Alan Joyce said the challenges the
airline faced were immense.
"We will do whatever we need to do to secure the Qantas
Group's future," he said.
He took a swipe at Air New Zealand and the other airline
stakeholders in Virgin Australia, saying there had been an
unprecedented distortion of the Australian domestic market.
Air New Zealand, Etihad and Singapore Airlines now have 73
per cent of Virgin - a fierce competitor for Qantas on its
domestic routes in particular - and this stake will increase
after a A$350 million capital raising.
"This foreign government capital has been used to finance
dramatic increases in domestic capacity, with profound
implications for the future of Australia's aviation
industry," Joyce said.
He said the Virgin rights issue "was designed to weaken
Qantas" in the domestic market.
"The uneven playing field in Australian aviation is being
tilted further. We cannot and we will not stand still in
these extraordinary circumstances," he said.
Qantas has appealed to the Australian government to review
foreign airlines' investment in Qantas and said it was taking
steps to make savings of $2 billion over the next three
Staff numbers would be cut by at least 1000 within the next
year, Joyce's own A$5.1 million salary would be cut and there
would be a pay freeze and no bonuses for executives for 12
The airline's network would be "optimised" and spending on
100 top suppliers reviewed.
Qantas would conduct a review of all planned capital spending
to achieve further substantial reductions to ensure the
business generates positive net free cash flow from the 2015
"As we work through our cost reductions, capital expenditure
and structural review, no options will be off the table,"
He said that since the global financial crisis, Qantas had
confronted a "fiercely difficult" operating environment -
including the strong Australian dollar and record jet fuel
"The Australian international market is the toughest anywhere
in the world," he said.
"Our competitors in the international market, almost all
owned or generously supported by their governments, have
increased capacity to pursue Australian dollar profits,
changing the shape of the market permanently."
- Grant Bradley of the NZ Herald