Qantas warns of more cuts to come

[David Knudsen]

From www.brisbanetimes.com.au

Qantas warns of more cuts to come
Danny John | July 2, 2008

QANTAS has raised the prospect of further route cuts, even higher fares and the grounding of more aircraft if the price of jet fuel continues to climb.

The airline, which is embroiled in damaging industrial disputes with key parts of its workforce over wage claims, said yesterday that it could take out as much as 14 per cent of its flying capacity to try to alleviate the financial damage of surging fuel costs.

About a third of Qantas's costs are taken up by fuel, the price of which has more than doubled in the past 12 months.

Like its international and domestic counterparts, Qantas has been trimming costs by reducing flights on unprofitable routes, cutting seat capacity, increasing fuel surcharges and taking an axe to destinations and jobs.

Further steps would be necessary if jet fuel continued to rise in price, the airline's chief executive, Geoff Dixon, said yesterday. He gave no direct indication of the impact on ticket prices but said that if fuel went up by 20 per cent then "people can extrapolate".

"To make a profit and invest in individual businesses, you have to charge at a rate to make the business viable," Mr Dixon said, while announcing changes to Qantas's frequent flyer program.

He pointed to measures taken by the airline in recent weeks - including reducing flights to Japan and South-East Asia, retiring older and less fuel-efficient aircraft and closing its Cairns pilot base - as the type of additional steps the company might have to take in future.

"If we have to cut, we will cut," said Mr Dixon, who is entering his last year in the post at one of the most challenging times in financial and operational terms since he took the job in March 2001.

However, he said it was unlikely Qantas would add an additional fuel surcharge to tickets booked by customers using its revamped frequent flyer program.

The new program unveiled by Mr Dixon will allow the program's 5 million members to book any seat on Qantas or Jetstar flights as well as let passengers use a combination of earned points with extra credit card payments.

The changes come as Qantas is considering selling part of its internally run and wholly owned frequent flyers' company through a share sale on the sharemarket. The move could raise more than $1 billion for the group.

[Brian Wilkes]

Retire all 737-400's ASAP will save $$$$$$$, and I'm sure they will all find a good home. Even the ones over in N.Z and rotate them with newer 738's.

[Raymond Rowe]

moderated.But no as usual the executive cries poor.

[Chris Tully]

I hear that more aeroplanes will be parked against the fence very soon.

[BradR]

Retire all 737-400's ASAP will save $$$$$$$, and I'm sure they will all find a good home

I doubt there will be many airlines in the world interested in acquiring 737 classics. The future of these birds lies in Coke cans unfortunately.

Brad

[Steve S... 2]

Hi,

Which aircraft have they actually "parked" and the registrations of them? Or is it correct to say no particular rego is parked indefinately and the fleet is rotated around so any rego may spend time parked?

I'm tired but I think you know what I mean

Anyone wanna join me on Facebook ?

[Ash W]

Originally Posted by BradR

I doubt there will be many airlines in the world interested in acquiring 737 classics. The future of these birds lies in Coke cans unfortunately.

Brad

They don't seem to have any issue finding a home for the -300's they have got rid of the past few years. There is a very large market in places like Africa and South America.

[Adrian B]

I thought the market for ex QF aircraft was good as they were perceived to be at the better end of maintenance compared to other carriers?

[D Chan]

Originally Posted by Ash W

They don't seem to have any issue finding a home for the -300's they have got rid of the past few years. There is a very large market in places like Africa and South America.

was reading from Flight International mag last week - UA is getting rid of a huge number of 733s (and probably 735s as well)... the resale value is expected to plummet given the large numbers of these a/c will appear in the market. 734s value is expected to be more stable because of its slightly larger size.