Qantas flags higher fares
An Age and AAP report today says that Qantas will increase its domestic and international air fares, becoming the latest airline to buckle to increased fuel pressures.
Qantas chief executive Geoff Dixon said the airline was confident of meeting its guidance for 2007-08 of at least 40% higher than the 2006-07 reported profit before tax.
However, it would mean increasing fares from May 9 across Qantas and QantasLink by about 3.5% domestically and 3% on international flights. Jetstar is still reviewing its position.
Qantas shares closed 1.8%, or 6 cents, higher to $3.43.
Mr Dixon said Qantas would also suspend its $1 billion share buyback plan, which started in September last year and has so far returned $500 million to shareholders.
Mr Dixon said the group’s fuel hedging program, its two brand strategy and efficiency gains from its sustainable future program to had enabled it to manage higher fuel costs to date.
”The continuing rise of jet fuel prices is of concern, however we have hedged 34% of our 2008/09 needs at a price of $US90 per barrel,” he said.
Qantas said the majority of its hedging is in the first half of the fiscal year and is predominantly in the form of options contracts.
”But if high fuel prices persist beyond this point it would be of increasing concern,” Mr Dixon said.
Mr Dixon said the group was trying to minimise the impact of fuel through its ongoing initiatives to reduce overall costs, including a hiring freeze and cutting back on non-essential spending.
”However, an increase in base fares is now necessary to partially bridge the widening gap between the actual increase in the cost of fuel and the amount we offset through surcharges or non-fuel cost improvements,” he said.
”We will continue to monitor fare and surcharge levels and review our network and schedule to optimise capacity.”
A Report by The Mole from the Age and AAP
John Alwyn-Jones
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