Qantas to cut fleet

Townsville Bulletin - - Investor -

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

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