Qantas halves profit prediction

April 15: Qantas announced that due to the rapid and significant deterioration of trading conditions in the past few weeks it is revising its 2008/2009 full-year profit outlook downwards from around $500 million to between $100 million and $200 million.
Qantas Chief Executive Officer Alan Joyce said that the airline’s international services and Qantas Freight were bearing the brunt of the decline in economic conditions, with a lesser impact on domestic services, while Jetstar, the Qantas Frequent Flyer business and QantasLink were continuing to perform well.
“Market conditions have deteriorated, especially in our international business. We are experiencing significantly lower demand, particularly in premium classes,” said Joyce. “We have no choice but to lower our profit forecast and make major changes to ensure Qantas can weather the current commercial environment – further capacity cuts will be made to Qantas Airlines and our freight business, on both international and domestic routes. We will ground additional aircraft and defer some aircraft orders, as well as maintaining a freeze on further capital expenditure.”
Ten aircraft will be grounded and made available for sale; four Airbus A380s and twelve 737-800 aircraft orders will be deferred by up to 14 months; the number and timing of 787-800 aircraft orders will be reviewed and 1,750 jobs will go.
“We want to avoid redundancies wherever possible,” said Joyce, “so we will be trying to use a range of workforce initiatives to manage the downturn such as, annual leave, long service leave, attrition, redeployment, leave without pay, promoting part-time work and exploring job-sharing.”