Qantas announces $400 million spending cuts

Qantas will cut spending by $400 million next financial year by delaying aircraft deliveries.

“The Qantas Group will reduce capital expenditure in 2012/13 by a further $400 million, in addition to the $500 million announced in February, as it pursues competitiveness in all business areas,” the airline said in a statement.

The reduction in 2012/13 expenditure will be achieved through changes to its fleet plan, including delaying the delivery of two Airbus A380s previously intended to arrive in early 2013.

These aircraft will now be delivered in 2016/17, while the final six A380s will be delivered from 2018-19.

The spending reductions follow announced staff cuts in its catering, cabin crew, pilots, engineering and ground operations.

Qantas also announced an increase in capacity, as it fights to maintain at least 65% of domestic market share.

“Our goal in the domestic market remains simple and consistent – we intend to retain the market share that enables us to maximise profit,” Joyce said in a statement.

Qantas will step up competition against its main competitor Virgin, by adding extra services during peak times on the busy east coast routes between Sydney, Melbourne and Brisbane.

It will also bring back Boeing 747s on its Sydney-Perth route, and add more Airbus A330s to the Melbourne-Perth route to increase its capacity meeting growing demand on the major trans-continental routes.

QantasLink will increase capacity across regional Queensland, while Jetstar will also increase its capacity.

The announcement may have been in response to a strategy paper released to the ASX yesterday by Virgin, which said it was increasing margins on the transcontinental and regional Queensland routes due to the mining boom.


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