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Rising fuel costs equal job cuts at Qantas

Friday 18th July 2008

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Qantas, which competes with Air New Zealand on its busiest trans-Tasman routes, said it will cut 1,500 jobs worldwide and cancel plans to hire new workers because of soaring prices for jet fuel.

The aviation industry is "facing a major crisis throughout the world" and Qantas has been forced to make the cuts to ensure its future, chief executive Geoff Dixon said in a statement.

The price of Singapore jet fuel has almost doubled in the past 12 months and reached a record US$181.85 a barrel on July 3. Airlines worldwide have cut jobs and raised airfares to try to claw back fuel costs. Industry-wide job cuts in the U.S. amount to about 20,000.

Qantas has about 36,000 workers. Dixon said the airline would seek voluntary redundancies and early retirements though some compulsory cuts would be necessary. The reduction in staff includes about 20% of Qantas's management and head office support jobs. The cuts would be made by December.

The changes - Qantas canceled plans to hire another 1,200 workers - will reduce forecast capacity growth to zero from 8% in 2008-2009, Dixon said. The airline will also retire 22 older aircraft from its 228-strong fleet, close call centres in Tucson, Arizona and London.

Like Air New Zealand, Qantas has imposed a freeze on executive pay.

Qantas rose 1.2% to A$3.34 on the ASX and has slid from more than A$4.50 this year. Air New Zealand rose 1.8% to NZ$1.13.

By Jonathan Underhill

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