In times of economic downfall such as these, even the big players of industry have had to put down their cards and resort to massive cost cutting schemes to make ends meet. One of the biggest airlines in Australia is currently suffering from a huge cut in profits due to various reasons and they are not sure how to bounce back. A yearly profit loss of$257m has so far been made public and it is quite a disastrous situation.
The reasons that have been given for this occurrence have been continuous strikes that have affected their fleet, a hike in the prices of aviation fuel and an international division that just isn’t working out too well. There was a profit of about $250 million in the year that passed and that is now not enough to deal with this new influx of problems in Qantas Airways. Since the airline’s conversion to a private limited company in 1995, profits have been quite steady and any problems could have easily been dealt with. Such a huge profit loss has never really happened before.
Alan Joyce who is currently the CEO of Qantas Airways Ltd has officially stated that certain orders will be withdrawn on behalf of the company so that it can begin to do some much-needed damage control. The order in question was of brand new 35 Boeing 787-9 aircraft. The airline however is going forward with its scheduled purchase of 15 787-8s. The Boeing contract that has been cancelled was of an approximate value of $8.5 billion.
Joyce went on to claim that the 787-9 aircraft was of vital importance but under the present circumstances, it could not be accommodated into the company’s expenditure plan. The order had been placed a long time ago and it seemed feasible at the time. All capital and cash has to be carefully handled now and spent in those areas that need it the most.
The company is chalking up most of its losses to a massive aviation fuel bill that it received this year which was a significant 18% increase from the year before. Qantas International has also suffered due to the recent financial losses of the company.