Qantas cancels Boeing order as it posts first ever annual loss

Published:  23 Aug at 11 AM

Qantas has posted its first ever full-year loss as it struggles to compete with increased competition and the high cost of aviation fuel. The Australian flag-carrier has also confirmed a cancellation with American manufacturer Boeing for 35 of its new Dreamliner aircraft.

For the year ending in June the airline said it made a A$244 million loss compared to a A$250 million profit the year before. A slow down in passenger demand has meant that the carrier is continuing to make large losses across its international business.

Qantas boss, Alan Joyce, said key markets such as Europe, Britain and the US continued to be a challenge in an uncertain trading environment. International operations are also being hurt by an increase in competition from Chinese and the Middle Eastern carriers. Qantas is also finding it difficult to maintain its dominance in the domestic market against challengers such as Virgin Australia which has been aggressively courting the lucrative corporate customer.

Qantas hopes that a restructuring plan which involves heavy job losses and cutting services on routes which are not turning a profit will make annual savings of around A$300 million. As well as the high cost of oil and increased competition Qantas has had to contend with disruption because of battles with the unions representing its crew, ground staff and pilots. The situation came to a head last year when Mr Joyce ordered the grounding of the airline’s entire fleet.

Qantas estimates that industrial action last year cost the airline nearly A$200 million.