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Thu, Aug 20, 2009 - Page 10 News List

Qantas profit dives 88%, cuts planned

AP , ADELAIDE, AUSTRALIA

Qantas Airways Ltd plans to cut costs by A$1.5 billion (US$1.2 billion) over the next three years after yesterday reporting that annual profit nose-dived 88 percent.

Despite the hefty fall in earnings, CEO Alan Joyce said the Australian national airline’s strategy of operating a full service carrier and the low cost Jetstar had helped it weather the economic downturn.

“Through unprecedented and significant shifts in operating conditions and demand, we have remained financially strong,” Joyce said in a statement. “This has been due to our strategy built around two strong flying brands in Qantas and Jetstar, a portfolio of airline-related businesses, and an ongoing focus on managing costs and driving efficiencies.”

The airline’s net profit for the year ended June 30 was A$117 million, down 87.9 percent.

Sales fell 6.9 percent to US$14.55 billion, affected by weaker domestic and international demand for tickets, while budget partner Jetstar increased capacity.

Joyce said the Qantas would take four or five A330-200 aircraft for delivery from November next year to provide for growth of Jetstar’s international operation.

The cost-reduction program will start with a target of A$500 million in the current financial year.

The statement said that while the number of passengers seemed to be rising, the market was still too uncertain to provide a profit forecast.

The company said no final dividend would be paid. Qantas did pay an interim dividend of US$0.06 per share.

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