Qantas Airways Ltd, Australia's biggest airline, said it may start a discount domestic carrier to take on Richard Branson's Virgin Blue Pty, after posting its first loss in eight years in the second half.
Qantas had a net loss of A$9 million (US$5.9 million) in the six months ended June 30, from a A$274.5 million profit a year ago, and a record first-half profit, the Sydney-based company said. Second-half sales fell 3.5 percent to A$5.5 billion on increased competition and the outbreak of SARS.
Virgin Blue has grabbed 30 percent of the domestic market and expanded its fleet to 32 planes since it began services three years ago with just two aircraft. It's aiming for 50 percent of the domestic market. Qantas chief executive Geoff Dixon today said he "must defend" a market share of between 65 percent and 70 percent.
"Brand loyalty isn't what is it used to be," said Rob Turner, who owns Qantas shares for the equivalent of US$1.1 billion he helps manage at AMP Henderson Global Investors' Value Plus division. "People will go where the cheaper prices are."
Qantas has been working on a plan for a discount carrier for five months, Dixon told reporters at a press conference. A decision will be made by November, he said.
A discount carrier "won't be anything to do with the main line at all," Dixon said. "It will have a totally separate management that will be allowed to run it as it should be run as a genuine low cost carrier."
Domestic pretax earnings fell 35 percent to A$223 million in the year ended June 30.
"We certainly welcome competition," said Virgin Blue spokeswoman Amanda Bolger. "We are very flattered that they seem to have altered their opinion they had a few years ago when they didn't even think we'd survive, let alone be profitable."
As part of a plan to slice A$1 billion from costs in the next two years, Dixon said he plans to replace workers with part-time staff to cut labor costs, replace business class seats with more coach seats and spend A$6 billion on more efficient planes in the next three years.
Qantas will save A$385 million from improved labor productivity, A$200 million from simplifying its fleet and overheads, A$135 million through distribution and A$80 million from improvements to domestic services. It plans to achieve A$350 million of savings this year.
Along with Virgin Blue, Qantas has to contend with Singapore Airlines, Emirates and Virgin Atlantic Airways Ltd, which want to expand services to Australia.
Air New Zealand Ltd last week slashed fares to Australia by an average of 20 percent. The two airlines are seeking regulatory approval for Qantas to take a 22.5 percent in Air New Zealand, and share flights and services. Their initial proposal was rejected by regulators in both countries as anti-competitive.
The CIA has a message for Chinese government officials worried about their place in Chinese President Xi Jinping’s (習近平) government: Come work with us. The agency released two Mandarin-language videos on social media on Thursday inviting disgruntled officials to contact the CIA. The recruitment videos posted on YouTube and X racked up more than 5 million views combined in their first day. The outreach comes as CIA Director John Ratcliffe has vowed to boost the agency’s use of intelligence from human sources and its focus on China, which has recently targeted US officials with its own espionage operations. The videos are “aimed at
STEADFAST FRIEND: The bills encourage increased Taiwan-US engagement and address China’s distortion of UN Resolution 2758 to isolate Taiwan internationally The Presidential Office yesterday thanked the US House of Representatives for unanimously passing two Taiwan-related bills highlighting its solid support for Taiwan’s democracy and global participation, and for deepening bilateral relations. One of the bills, the Taiwan Assurance Implementation Act, requires the US Department of State to periodically review its guidelines for engagement with Taiwan, and report to the US Congress on the guidelines and plans to lift self-imposed limitations on US-Taiwan engagement. The other bill is the Taiwan International Solidarity Act, which clarifies that UN Resolution 2758 does not address the issue of the representation of Taiwan or its people in
DEFENDING DEMOCRACY: Taiwan shares the same values as those that fought in WWII, and nations must unite to halt the expansion of a new authoritarian bloc, Lai said The government yesterday held a commemoration ceremony for Victory in Europe (V-E) Day, joining the rest of the world for the first time to mark the anniversary of the end of World War II in Europe. Taiwan honoring V-E Day signifies “our growing connections with the international community,” President William Lai (賴清德) said at a reception in Taipei on the 80th anniversary of V-E Day. One of the major lessons of World War II is that “authoritarianism and aggression lead only to slaughter, tragedy and greater inequality,” Lai said. Even more importantly, the war also taught people that “those who cherish peace cannot
US Indo-Pacific Commander Admiral Samuel Paparo on Friday expressed concern over the rate at which China is diversifying its military exercises, the Financial Times (FT) reported on Saturday. “The rates of change on the depth and breadth of their exercises is the one non-linear effect that I’ve seen in the last year that wakes me up at night or keeps me up at night,” Paparo was quoted by FT as saying while attending the annual Sedona Forum at the McCain Institute in Arizona. Paparo also expressed concern over the speed with which China was expanding its military. While the US
RSS