Qantas expects to post a half-year loss of up to $300 million and is accelerating a cost cutting program as it faces challenging market conditions.
“As we work through our cost reductions, capital expediture and structural review, no options will be off the table,” chief executive Alan Joyce said in a statement.
The airline will cut up to 1000 jobs over the next year, with a before-tax loss of between $250 million and $300 million expected for the six months to 31 December.
Shares were down 13.69% after the announcement, which said trading conditions had been particularly bad in November of this year.
That national carrier will make accelerated cost reductions across all areas of the business, to achieve total cost savings of $2 billion over three years, it said.
Joyce will also take a pay cut, along with the board of directors. Salaries have also been frozen and no bonuses will be paid to executives.
It is not possible to provide further guidance, Qantas said, as fuel prices and foreign exchange rates as well as global economic conditions are too volatile.
This comes as Qantas seeks help from the federal government as it faces increased competition from its main domestic competitor Virgin Australia.
“None of the measures being discussed with the government would alleviate the need for us to take the comprehensive actions we have announced today,” Joyce said.
“Government action will, however, be key in enabling us to keep competing effectively on a level playing field.”
Joyce, who was already involved in negotiations with the former Labor government, has petitioned The Coalition to put a stop to a $350 million capital raising planned by Virgin.
Virgin is majority-owned by foreign airlines that compete with Qantas’ international business. Joyce says it is unfair they can put money in to Virgin, which is undercutting his domestic routes.
Qantas needs its domestic business, which currently controls 65% of the market, to perform well in order for its to fund a still-recovering international arm.
In order to cut the 1000 jobs Qantas will speed up an existing savings program, which will also include “further overhead reductions” and a review of what the airline spends with its top 100 suppliers.
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