Qantas to cut fleet
HIGH PRICE: The financial cost of floods, earthquakes and tsunami will result in a $ 140 million hit for Qantas QANTAS Airways Ltd says the natural disasters in Queensland, New Zealand and Japan will result in a $ 140 million hit to the bottom line for the second half of 2010/ 11.
The ‘‘ significant’’ financial cost of t h e f l o o d s , e a r t h q u a k e s a n d tsunami come on top of soaring jet fuel prices and the previously announced impact of Qantas’s A380s being grounded last year following an engine explosion.
In response, Qantas chief executive Alan Joyce announced the l a t e s t r o u n d o f c o s t - c u t t i n g measures, including job losses, in an attempt to ‘‘ ensure the ongoing sustainability of our business’’.
‘‘ The significant and sustained increases in the price of fuel is the most serious challenge Qantas has faced since the global financial crisis, ’’ Mr Joyce said
In an update on the impact of the natural disasters, Qantas said the Japan earthquake and tsunami would cost the airline $ 45 million, with the Christchurch earthquake to result in a $ 15 million hit.
The airline also updated the impact of the floods and Cyclones Yasi and Carlos in Queensland, which would now be $ 60 million and $ 20 million, respectively.
At the half-year results in February, Qantas said the impact of the floods would be $ 55 million, while Yasi was expected to have a $ 15 million impact. Mr Joyce said it was too early to determine how these events would affect Qantas’s financial results for 2011/ 12.
Meanwhile, Qantas spokesman Luke Enright said earnings guidance delivered in February for 2010/ 11 full year underlying profit b e f o r e t a x t o b e ‘ ‘ mat e r i a l l y stronger’’ than the prior year was unchanged. Measures unveiled included scaling back anticipated capacity growth during the second half of 2010/ 11 at both mainline operations and offshoot Jetstar.
Domestic capacity was now expected to grow 8 per cent in the second half of 2010/ 11, down from 14 per cent previously forecast, while the number of international seats would increase 7 per cent, down from 10 per cent.
To that end, Qantas said it would suspend some flights between Australia and Japan, use smaller aircraft on certain routes and reduce frequencies on services to New Zealand.
Qantas shares closed 4c at $ 2.19. Qantas’s low-cost