Qantas cutting Auckland-LA service

Qantas will end flights from Auckland to Los Angeles in May as part of cost-cutting measures that also include job losses, delayed orders for new aircraft and the early retirement of others.

The moves were announced today by chief executive Alan Joyce in results that showed a A$215 million ($261.72m) fall in underlying pre-tax profit in the six months to the end of December.

Joyce said that with a volatile world economy and soaring costs disciplined financial management was vital.

"That means taking hard decisions today to ensure that we can secure jobs and success for the future.''

The decision to withdraw from Auckland-Los Angeles flights from May 6 was one of a number of routes hit by the pressures on Qantas' struggling international operations.

The airline will also drop flights between Singapore and Mumbai, India, in May, adding to previously-announced withdrawals next month from the Hong Kong-London and Bangkok-London routes.

Boeing 747s will be replaced by Airbus A330s on a number of international and domestic flights, two 747 aircraft will be retired early in addition to the four announced last August, and new Boeing 787-800 deliveries, hit by manufacturing delays, will be deferred.

These moves will be part of reductions of A$700m ($852.11m) in capital spending, to A$4.6 billion ($5.6b) in 2011-13, with further cuts to be identified.

Heavy maintenance operations in Australia will also be hit, with 500 jobs to be lost as "structurally redundant'' because of aircraft retirement and operational changes, although Joyce said none would be moved overseas.

In the half-year to December Qantas' profit fell 83 per cent to A$42m ($51.13m), following the grounding of the airline's fleet during industrial action that cost A$194m ($236.16m) and fuel costs that rose 26 per cent to A$2.2b ($2.68b).

Jetstar's underlying earnings before interest, taxes and depreciation increased to a record A$147m ($178.94m) for the half, and Qantas Frequent Flyer's EBIT rose from A$107m ($130.25m) to A$119m ($144.86m).

But the underlying EBIT for Qantas Freight fell A$3m ($3.65m) to A$38m ($46.26).

Joyce said the measures announced to day would position the Qantas for a strong, sustainable future and build long-term shareholder value.

"We have a clear strategy for the future based on our strong domestic airline businesses, transforming Qantas International and other business areas, the continued growth of Qantas Frequent Flyer and growing Jetstar in Asia,'' he said.

- Greg Ansley of the NZ Herald in Canberra

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