SYDNEY (Thomson Financial) - Australia's largest airline Qantas Airways Ltd.
said on Wednesday it will cut capacity on domestic routes as part of cost saving
measures to counter the impact of soaring jet fuel costs.
The group said it would cancel 5 percent of available seat kilometres
(ASKs), equivalent to grounding six aircraft in Australia, as its fuel bill is
expected to increase by more than A$2 billion ($1.92 billion) in the year to
June 30, 2009.
"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," Qantas chief executive Geoff Dixon said in a statement.
Dixon said the airline also plans to accelerate the retirement of four
B747-300 aircraft currently operating trans-continental services between
Australia's east coast and the west coast city of Perth, and adjust the flying
patterns of other aircraft to reduce the utilisation of its less fuel efficient
B747-400 fleet.
He said Qantas was finalising details of its international network
restructure, including capacity adjustments and market exits, and would announce
these within the next week.
Earlier, New Zealand's largest airline Air New Zealand Ltd. said it will be
replacing Boeing 747s on the return Auckland-Los Angeles-London services with
more fuel efficient Boeing 777s from September to reduce fuel costs.
Air New Zealand also lowered earnings guidance further as jet fuel prices
continue to soar.
The airline, 77 percent-owned by the New Zealand government, said it now
expects normalised pre-tax profit before one-off items for the year to June 30
to be below NZ$200 million ($157.8 million), down from guidance of a NZ$200
million to NZ$220 million result provided on April 23.
($1 = A$1.04, NZ$1.27)
bruce.hextall@thomsonreuters.com
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bhx/ng
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