Qantas to slash international costs

Qantas Airways plans to slash the cost base of its ailing international business by almost a third over the next three years, in a move that has brought speculation of further capacity cuts and job losses.

Chief financial officer Gareth Evans said this month that ‘‘A$1 billion [NZ$1.1b] or thereabouts’’ of the company’s $2b cost savings target would come from its international division.

Qantas, including Jetstar, has a total controllable annual cost base of $11.6b, and the planned cuts will hit the international division disproportionately.

Of the $2b target for the business as a whole, Qantas has said it will cut $800 million from its cost base by June next year and the other $1.2b of savings are expected over the following two financial years.

Qantas is expected to provide a further update on cost-cutting alongside its full-year results on August 28.

In May it gave details of several of its planned cost-cutting initiatives.

The total from the initiatives announced at the time would save a combined $375m.

Qantas has since announced a few more international changes, such as cutting flights to New Zealand in non-peak periods.

An analyst said he wondered how Qantas could cut $1b from its international division without route withdrawals and job cuts, even though the airline has played down the prospect of more wholesale network changes.

‘‘They will probably announce they will cut another 2000 or 3000 [jobs] on top of the 5000 already announced,’’ the analyst said.

Another analyst said he was not factoring in all of Qantas’s planned cost savings in his figures because ‘‘we just don’t have the clarity to break it down’’.

A Qantas spokesman said the airline had about 250 projects under way to contribute to its $2b savings target.

‘‘We’ve provided a lot of detail already on some of the key initiatives, but we’re not going to comment on speculation of what other components will or won’t be,’’ he said.