Qantas will axe at least 1000 jobs over the next year and warned that it will slump to a loss of up to $300 million in the first half, blaming a market deterioration in trading conditions and weaker return on fares.
Qantas shares slumped 16 per cent to $1.02 - just shy of an all-time low of 96 cents reached last year - following the earnings warning.
After pleading over the last two weeks for financial assistance from the federal government, Qantas said in a profit warning today that the ''challenges we now face are immense''.
The airline will step up cost savings over the next three years, stripping out $2 billion.
It has also signalled that it will consider selling parts of its business. It has not named potential units which could be sold but there has been speculation that it could consider a part sale of its frequent flyer business.
Qantas said it now expects to report an underlying loss before tax of between $250 million and $300 million for the six months to December 31. The first half is typically the airline's strongest.
Australia's largest airline said it expected yields – or return on fares – across the group to be 3.5 per cent lower in the first half compared with the same period last year.
Qantas chief executive Alan Joyce said the circumstances demanded urgent action.
''The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia,'' he said in a statement.
Mr Joyce also said there had been ''unprecedented distortion of the Australian domestic market with Virgin Australia's strategy to seek major ownership and massive financial backing from government-owned airlines''.
''We cannot and we will not stand still in these extraordinary circumstances.''
Qantas has been lobbying the government to provide financial assistance which could include a debt guarantee or the purchase of a small stake.
Mr Joyce said "no options will be off the table" as the airline continued to "work through our cost reductions, capital expenditure and structural review".
Source: Matt O’Sullivan/ business/aviation/qantas or http://www.smh.com.au