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Qantas International to report deep loss in 2011/12

5-Jun-2012 10:10 AM

Qantas Group announced (05-Jun-2012) the structural issues in its business have been compounded by the impact of global economic factors including increasing fuel prices, the weak situation in the UK and European markets, the high Australian dollar as well as the AUD100 million (USD96.9 million) expense of industrial action against the carrier. Despite the industrial action, Qantas expects its domestic business from both Qantas and Jetstar to deliver improved results, year-on-year, with customer satisfaction "as its highest sustained level since 2004 and the Group continues to deliver the best network, frequency and on-time performance in the market". Qantas stated it is the preferred carrier for corporate travel and is "capitalising on the strength of the resources industry and the fly in fly-out (FIFO) market" through QantasLink and Network Aviation. Qantas CEO Alan Joyce stated the worsening operating environment, particularly on the international front, reinforces the international business' five-year transformation plan initially announced in Aug-2011.

Qantas Group: "We have taken decisive action to mitigate losses in Qantas International by withdrawing from lossmaking routes, reducing capital investment, and transforming Qantas engineering. The introduction of a new Qantas Group structure with dedicated CEOs for Qantas International and Qantas Domestic will bring further rigour to our business. We have also doubled capacity on the successful Dallas/Fort Worth route and launched new services to the South American gateway of Santiago. We are improving our flying economics and lifting customer satisfaction through our Boeing 747 reconfiguration program. We are also attacking costs and allocating aircraft and capital efficiently. Over $300 million in annual benefits have been identified from the changes we are making and we will continue to seek improvements in all parts of the business. We remain focused on returning Qantas International to profitability in 2014 and for Qantas International and Domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011," Alan Joyce, CEO. Source: Company statement, 05-Jun-2012.