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Qantas to reduce international flights by up to 20%

Travel News Asia 28 March 2003

Qantas said today the war in Iraq and the effects of Severe Acute Respiratory Syndrome in Asia had continued to adversely affect bookings.

Qantas Chief Executive Officer Geoff Dixon said that, as a result, Qantas would further reduce planned international flying by a total of up to 20 per cent between 1 April and mid-July. 

Mr Dixon said that when the company announced its half-year results on 20 February it stated that Qantas was still on track to achieve its full year profit target despite pressure from the heightened tensions surrounding Iraq and the very public threat of terrorism.

"We cautioned at the time, however, that if tensions continued around Iraq and terrorism, bookings could deteriorate further and, in such an environment, our profit target would become more difficult to achieve," he said.

Mr Dixon said this was now a reality and, on current indications, Qantas would be unable to meet market expectations for the full year profit result.

"We continue to maintain high levels of liquidity and a strong balance sheet," he said. "The company will still record a strong result for the year ended 30 June 2003 and will remain one of the most profitable airlines in the world.

"We also remain well positioned to maximise opportunities when the global travel market recovers."

Qantas would continue to monitor events closely and make additional changes as necessary.

The interim Qantas schedule, which is effective for varying periods between 1 April and mid-July, includes:

* reduction of UK services from 21 to 17 per week;

* reduction of Rome services from three to two per week;

* reduction of Paris services from three to two per week;

* reduction of Australia-Los Angeles services from 28 to 25 per week;

* deferral of the Qantas Chicago extensions which were due to commence on 31 March;

* suspension of the airline's twice-weekly Brisbane-Hong Kong services, and suspension of four Sydney-Hong Kong services each week (reducing services from 30 to 24 per week);

* adjustments to flight frequencies from Sydney, Cairns and Melbourne to Japan resulting in a 20 per cent capacity reduction (Qantas will continue to operate 17 services to Japan each week); and

* deferral of a range of planned increases to services on existing routes.

Qantas has said that some of the international capacity will be redeployed to domestic operations.

Mr Dixon said that, as announced previously, Qantas had implemented a number of initiatives to mitigate the effects of the downturn including:

* use of accumulated annual leave to reduce staffing between now and 30 June 2003 by the equivalent of 2,500 full time employees;

* permanent staff reductions through attrition and not filling vacant positions;

* a freeze on the hiring of new staff; and

* a freeze on discretionary expenditure.

"The severity of the downturn could require us to consider further initiatives," Mr Dixon said. "If this does become necessary, we will hold discussions with our staff and Unions."

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