Qantas Takes Drastic Action To Preserve Billion Dollar Profit By Cutting Services And Raising Fares

ERROL PARKER | Editor-at-large | Contact

Qantas said on Tuesday it had raised fares, slashed domestic flight capacity and cancelled routes as surging fuel costs threatened to blow out its bill to A$3.3 billion. The figure landed on the Australian travelling public like a Lenovo ThinkPad glass thrown against a boardroom wall.

The airline, which has never met a crisis it couldn't monetise, said jet fuel prices had more than doubled since February. The revised estimate sits more than $800 million above its previous forecast. Someone is eating that number. It will not be the shareholders.

Domestic capacity would be cut by five percentage points across May and June, concentrated on routes between major capital cities the big red and white sky bus services. Affected customers, the airline said with the straight-faced audacity of a man lighting a cigar in a maternity ward, would be contacted directly and offered alternative flights or a refund.

Closer to home, our cosmopolitan desert community has been indefinitely cut from the network. Four further routes face temporary suspension. The lawyers call this capacity optimisation. The people of Betoota call it something unfit to print.

Qantas said it had hedged 90 per cent of its crude oil exposure but remained nude against jet refining margins, which screamed from $20 per barrel in February to a peak of around $120.

A planned $150 million share buyback has not commenced. The dividend proceeds as scheduled. Of course it does.

The airline said it retains optionality to take further actions. In this business, that sentence does a lot of heavy lifting.

Qantas shares fell 0.8 per cent. The market shrugged and ordered another round.

More to come.