Qantas Airways will cancel $US8.5 billion ($A8.12 billion) in aircraft orders to cut costs after the struggling airline notched up its first full year loss since privatisation.
Qantas on Thursday blamed high fuel prices and its struggling international division for the net loss of $245 million for the 12 months to June 30, 2012.
The result compares to its net profit of $250 million in the prior year.
In announcing the loss, chief executive Alan Joyce confirmed he had decided not to take his bonus for this year.
“Given the tough year that we’ve had, the tough year the shareholders had, I didn’t think it was appropriate to take the bonus,” he said.
“I think last year the bonus was well over $A1 million, this year it would have been less than that.”
Fuel prices rose 18 per cent to a record $4.329 billion in 2011/12, Qantas said.
The airline group also took a $194 million hit due to the grounding of its fleet in response to industrial action last November, and its international division lost $450 million.
Mr Joyce said it was not possible to give a profit outlook for the year ahead, citing the volatility in fuel prices and exchange rates, as well as difficult trading conditions in the United Kingdom, Europe and the United States.
Two unions representing Qantas staff – the Transport Workers Union and Australian and International Pilots Association said Qantas’s loss was due to poor management in the past two years.
Transport Workers Union national secretary Tony Sheldon blamed the net loss on the “disastrous management” at Qantas, which was privatised in the early 1990s.
Meanwhile, Qantas has cancelled its order for 35 Boeing 787-9 aircraft to help cut costs and return its international division to profitability.
Qantas has kept 50 options and purchase rights from 2016 onwards for the new generation jets, which gives it flexibility in the way it managed its fleet.
In 2011, Qantas pushed back deliveries of six Airbus A380 double-decker superjumbos until 2018/19.
Qantas has also cut a number of international routes recently, a trend Morningstar analyst Nachiket Moghe expects to continue.
“The international business will continue to shrink over time from where it is now,” he said.
Qantas’s domestic operations continued to be the airline group’s money spinner, generating about $429 million in 2011/12, broadly flat with 2010/11.
However, the division is expected to come under pressure as Virgin Australia and Tiger Airways increase flights and routes.
To protect its market share, Qantas and its discount carrier Jetstar will increase capacity by nine to 11 per cent in Australia in the first half of 2012/13.
The Centre for Aviation said yields – an industry term used to describe average airfares per passenger – which were already weakened in the local market, would continue to fall.
“Domestic overcapacity will show no signs of relenting,” it said in a research note.
No dividend was declared.
Qantas shares were 4.25 cents higher at $1.2125.
