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Qantas defers A380 deliveries as economic conditions worsen



By Siva Govindasamy

Qantas Airways will defer the delivery of Airbus A380 and Boeing 737-800 aircraft, slash capacity, and cut jobs in response to worsening economic conditions, which have forced the Australian airline to cut its profit forecast drastically for the current fiscal year.

The Oneworld alliance carrier says that it will defer the delivery of four A380s by 10-12 months and 12 737-800s for an average of 14 months, and is in talks with Boeing to reduce the delivery of 787-8 aircraft over the near term. In addition, it will ground 10 aircraft and make them available for sale. It is also cutting flying capacity for domestic and international routes by 5% and reducing freight capacity on both as well.

Qantas chief executive Alan Joyce says that the carrier, and its low-cost subsidiary Jetstar, will manage wage costs by employing a slew of initiatives such annual leave, long service leave, attrition, redeployment, leave without pay, promoting part-time work and job-sharing. Redundancies, however, will be "unavoidable".

Qantas A380, Qantas

Source: Qantas

"Unfortunately, responding rapidly to declining economic conditions is going to have a direct impact on our staff. We employ over 34,000 people and we are striving to protect as many of their jobs as possible, but the capacity reductions to protect the long-term viability of the overall Qantas Group mean that up to 1,250 equivalent full-time positions will be affected," he says.

The airline has downgraded its pre-tax profit forecast for the financial year, which ends 30 June, to between A$100 million ($73 million) and A$200 million from A$500 million. To rein in costs, Qantas plans to reduce capital expenditure by at least A$800 million in the next fiscal year and remove 500 management jobs, in addition to 90 management job cuts that it announced in March.

"We are determined to see the Group remain strong and profitable over the longer-term in order to protect the interests of our employees and shareholders. The structural flexibility of our two-brand strategy, Qantas' diversified portfolio of businesses, and prudent financial management have cushioned the impact of the recent deterioration in market conditions. Taking further action on costs and capacity will ensure we can continue to benefit from those strategies," says Joyce.





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