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QANTAS (ASX:QAN) will return its Brisbane Airport terminal lease to the airport for $112 million in cash, in a bid to cut costs following significant losses.
The airline today announced a $235 million statutory loss after tax and four per cent drop in revenue to $7.9 billion in the half year to December.
The sale of the airport lease is part of the broader $2 billion cost-cutting exercise, which will include the loss of 5000 jobs and pay reductions across the group, plus the sale of more than 50 of its aircraft.
Chief executive officer Alan Joyce says the company would take comprehensive action to survive in the competitive market.
“Qantas’ competitors have increased capacity to Australia by 46 per cent since 2009, more than double the world average, at a time of record fuel costs and economic volatility.
“The Australian domestic market has been distorted by current Australian aviation policy, which allows Virgin Australia to be majority-owned by three foreign government-backed airlines – yet retain access to bilateral flying rights.
“We have been clear with the Australian Government about the uneven playing field and the measures we believe could address it.
“But our focus today is on the immediate steps that Qantas must take,” Joyce says.
Joyce says he regrets the need for job losses and will work with the employees to manage their exit from the business.
“At the end of this transformation, Qantas will remain an employer of more than 27,000 people, the vast majority based in Australia- and we will be a better and more competitive company,” he says.
The airline will review other assets in its portfolio, with the Brisbane Airport deal expected to be finalised in the second half of FY14.
QAN is trading down 7.48 per cent at $1.175 this morning.
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