By Emma Thelwell
MSN NZ Money
Qantas has announced a $1.5 billion cost-cutting plan, leaving thousands of workers fearing for their jobs, after reporting an 87 percent drop in profits.
The group said the outbreak of swine flu alone wiped $45 million from its annual profits, with a further $37 million blow from the introduction of the new A380 and a loss of $130 million off the back of industrial strikes.
Qantas which employs 35,000 people globally, said it will not pay out its final dividend to shareholders, after unveiling profits of $117 million for the full year.
One-off events aside, Qantas chief executive Alan Joyce said there has never been a more volatile and challenging time for the industry.
With passenger demand crippled by the global economic downturn, Mr Joyce said Qantas was lucky to turn a profit at all. Sales for the year to the end of June fell 6.9 per cent to $14.55 billion.
"The diversity of the Qantas Group’s operations had contributed to it being one of the few airline operators worldwide to produce a full-year profit, despite the impact of the global economic downturn," he said.
The International Air Transport Association had previously forecast US$9 billion in losses for global aviation.
Mr Joyce said that in the six months to the end of June, the airline was dogged by price wars both at home and abroad, as its' competitors battle to dominate the skies.
Despite the softening market, the group plans to add more than 160 new aircraft to its fleet over the next 10 years, in order to enter new markets.
It also plans to invest further in Jetstar in the coming months, after the budget brand secured itself as the largest carrier between Japan and Australia.
While Mr Joyce said there are "signs of improvement", passenger numbers remain volatile and fuel costs look set to rise.
Eyeing such clouds on the horizon, Mr Joyce has announced a 'Q Future' plan to slash costs by $1.5 billion over the next three years, starting immediately with a view to saving $500 million in the current financial year alone.
A spokesman for Qantas told ninemsn today that jobs would not be affected under the Q Future plan.
"As far as Q Future is concerned, there are no plans for further job cuts", he said.
The spokesman told ninemsn the plan centred on growth and retaining jobs. However, he admitted that "no company can rule out job cuts".
In the company's annual results Mr Joyce added: "Q Future will focus on Qantas' operations and improving efficiencies across a range of areas, including sales and distribution, fuel conservation, aircraft utilisation and schedule, and procurement."
"We are also keeping a close watch on oil and fuel prices. While well below the record levels seen in 2008, they remain volatile and are trending upwards."
Looking ahead, Mr Joyce said it was impossible to gauge if the group would remain profitable.
"Given the high level of uncertainty it is not possible to provide any profit guidance", he said.