Australian carrier Qantas scaled back growth plans and canceled aircraft orders yesterday in response to slowing domestic demand, as it grapples with high fuel costs and natural disasters.
Chief executive Alan Joyce said the airlithne was now eying 5.5 percent domestic capacity growth for this year and next year, compared with 8 percent previously.
SPENDING SLASHED
Spending will be slashed by A$400 million (US$426 million) — A$100 million from the second half of the current financial year, which ends this month, and A$300 million from this year and next year.
Aircraft lease plans will be reduced by A$300 million, Joyce said, with Qantas now expecting to take delivery of 34 aircraft in this year and next year instead of the 43 previously announced.
Orders for 12 narrow-body jets will be canceled or deferred, including three anticipated in the second half of this year.
Qantas has already said that it is planning to slash capacity and jobs — mostly management positions — in response to a string of natural disasters and record jet fuel prices.
“The Qantas Group has always taken decisive action to match capacity to demand,” Joyce said in a statement yesterday, citing “slower overall growth rates in the domestic market.”
“We are well-placed to retain our profit-maximizing 65 percent domestic market share,” Joyce said.
ASH PLUME
The announcement comes as an ash plume from Chile’s Puyehue volcano wreaks travel chaos in Australia and New Zealand, forcing widespread flight cancellations and delays that have stranded thousands of travelers.
Shares in the national carrier were flat at A$1.88 following the news.
Qantas posted a four-fold increase in first-half net profit in February to A$241 million.
It estimated that before-tax profits for the financial year ending this month would be “materially stronger” than last year’s figure of A$377 million.
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