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(AFP)
SYDNEY (AFP) - Qantas will slash 1,500 jobs worldwide as Australia's largest airline seeks to combat rising oil prices and challenging market conditions, chief executive Geoff Dixon said Friday.
The carrier also cancelled plans to hire 1,200 new staff and increase its capacity by eight percent in 2008-2009, and announced it will retire up to 22 older aircraft from its fleet.
"It's as tough as I've seen it," Dixon said of conditions in the aviation industry. "It's not just aviation being hurt by oil prices, it's other things such as food."
He refused to guarantee there would be no more job losses, saying it hinged on the price of oil, which was set to push the airline's fuel bill up by more than two billion dollars (1.9 billion US) in 2008-2009.
"We hope there will not be any more job cuts, but we don't know where oil will be in 12 months," he told reporters.
Dixon said the aviation industry was facing a crisis worldwide due to the volatility in the price of oil, which last week soared to record highs above 147 dollars per barrel.
He said that by acting now, Qantas was protecting its competitive position and the majority of its 36,000 jobs, and was enabling the company to "grow profitably when conditions improve."
Dixon said some operational jobs would be lost, although the bulk of positions being cut were in non-operational areas, with more than 20 percent of management and head office support jobs to go.
Most of the jobs losses will be in Australia but up to 200 based offshore have also been targeted in the cost-cutting drive, including 99 at call centres in Tucson, Arizona and London that will be shut, Dixon said.
The job cuts would come into effect by December and a recruitment and executive pay freeze would remain in place indefinitely, he said.
Commsec Equities economist Savanth Sebastian said the belt-tightening had been widely anticipated by the market.
"The cost of jet fuel has jumped 60 percent since the start of the year," he told ABC radio.
"The airline sector is suffering, profits are dwindling. Cost-cutting has become a favourite at the moment, and wages make up a large amount of costs."
The latest round of cuts come after Qantas slashed flights to Asia and reduced its domestic capacity by five percent in recent months in response to the fuel crisis.
The airline has also hiked fares twice since May, and Dixon said more were on the cards if there was no relief on fuel costs.
"We are great believers in moving quickly," he said. "We will have to put up fares if oil continues to go up."
Dixon said that despite retiring the older aircraft from its fleet of 228, Qantas would press ahead with the introduction of new, more fuel-efficient aircraft such as the Airbus A380 and the Boeing B787.
He also said Qantas had reached agreement with the Australian Licenced Aircraft Engineers Association for a four-year deal on wages.
Qantas engineers represented by another union disrupted flights last month when they called a strike over wage demands.
The Australian Services Union said it had not been expecting the Qantas announcement, adding the latest 1,500 job cuts came on top of 1,300 over the past three years.
After the market closed, budget Australian carrier Virgin Blue later said it would reduce capacity by 12 percent and introduce other measures to counter high fuel costs.
It had previously planned to cut capacity for the year ending June 30, 2009 by six percent, but said it had been forced to double this because of "punitive fuel prices."
The airline will also raise some fares, introduce new baggage charges and remove two Boeing 737 planes from the domestic market and delay delivery of five Embraer aircraft planned for use in 2009.
Qantas shares closed flat at 3.30 dollars while Virgin Blue stock closed up 1.5 percent at 68 cents in an overall falling market.
-- Dow Jones Newswires contributed to this story --
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