For the first time since its privatization in 1995, Australian airline Qantas has announced an annual loss due to high fuel expenses and increasing deficits in its international operations.
A net loss of $244 million Australian dollars was reported by the company for the fiscal year ending June 30.
This figure stands in stark contrast to the net profit of $250 million recorded in the prior year.
As a result of “lower growth requirements,” Qantas has cancelled orders for 35 Boeing Dreamliner jets valued at $8.5 billion.
Alan Joyce, Qantas’ chief executive, indicated that the pace of growth is predicted to remain slow due to the uncertain nature of the global economy.
In a statement, he remarked, “Clearly we confront very difficult and uncertain trading conditions in Britain, Europe, and the United States.”
The primary factor affecting Qantas’ earnings was the escalating losses in its international operations, which recorded a net loss of $450 million.
The airline’s international division has suffered from diminishing demand in its important markets.
Additionally, Qantas has seen a decline in passenger numbers as competitors have gained ground, leading to a reduced share of the international market.
“Our biggest challenge is Qantas International,” stated Mr. Joyce.
To improve the situation of this division, the firm has already implemented strategies such as cancelling services on unprofitable routes and optimizing certain maintenance operations.
The restructuring initiative is also anticipated to lead to approximately 2,800 job reductions, contributing to further cost savings.
According to the firm, once fully executed, the measures could yield annual savings of up to $300 million.
“Qantas’ international turnaround plan is on track and set for improvement in 2012-13,” Mr. Joyce expressed.
The airline’s financial health was further affected by a range of other factors throughout the last fiscal year.
Soaring fuel prices significantly impacted its financial standing. The company stated that fuel expenses surged to a record A$4.3 billion during the period, marking an increase of $645 million compared to the previous year.
It was reported that the industrial dispute cost the firm $194 million.
Analysts indicated that, notwithstanding the workforce reductions, high labor costs continue to pose a challenge for Qantas.
by Vandas Voice
