ATW Daily News

Qantas announces cuts as fuel prices soar

Thursday May 29, 2008

Qantas will slash capacity by 5% due to rising fuel prices and warned the Australian Stock Exchange yesterday that it plans to cut its fleet, network and workforce as it expects its fuel bill to increase by more than A$2 billion ($1.92 billion) in the 2008-09 fiscal year.

CEO Geoff Dixon said in a statement to the exchange: "The fact is that fuel prices are something we have no control over, so we have to look harder at areas where we do have control. Despite our fuel hedging strategy, fuel surcharges, two separate across-the-board fare increases and a recruitment freeze, we are not bridging the widening gap between the actual increase in the cost of fuel and the amount we offset'' (ATWOnline, May 23).

QF will retire one 737-400, ground two 767-300ERs and one Jetstar Airways A320 and cancel delivery of one Jetstar A321. Also on the hit list are four 747-300s QF uses on flights between Sydney/Melbourne and Perth that will be phased out by December. They will be replaced by A330s released from international duty with the arrival of the airline's first A380s. It also plans to reduce the flying time of its 747-400 fleet.

Qantas and Jetstar will quit five domestic routes altogether and reduce frequency on four others, and the company is restructuring its international network, where the cuts are expected to be deeper. Dixon also warned of staff cuts as well as an accelerated leave program to mitigate the requirement for redundancies.

In an unrelated matter, QF told travelers yesterday that "it would again have measures in place, including a limited number of flight cancellations, to protect its operations during industrial action by the Australian Licensed Aircraft Engineers Assn." planned for today and Friday. ALAEA members are planning 4-hr. strikes in Sydney and Brisbane today and in Melbourne Friday to support a 4% pay increase. The airline has offered 3%, which most other unions representing QF staff have accepted (ATWOnline, May 12).

by Geoffrey Thomas

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