Qantas to cut 1,000 jobs as airline forecasts half-year loss of up to A$300 million

Qantas Airways, Australia's largest carrier, yesterday flagged a record A$300 million (HK$2.1 billion) first-half loss and 1,000 job cuts, sending its shares down the most in 18 months.

Rising fuel costs and a fall in ticket prices amid an increasing supply of airline seats will drive the company to lose between A$250 million and A$300 million in the first half before tax and one-time items, the Sydney-based company said in a regulatory statement.

The shares plunged 11.2 per cent to close at A$1.07 in Sydney.

Qantas has called for support from Australia's government as second-ranked Virgin Australia funds attempts to take market share by selling new stock. The carrier said it will review its spending plans, freeze executive pay and look for other ways to cut costs as the outlook for the second half remained volatile.

"The loss is larger than expected," said David Liu, head of research at Above the Index Asset Management. "Qantas' investment grade rating is clearly at risk now. Maybe the government needs to step in and assist Qantas."

The cost of insuring the airline's corporate bonds against non-payment jumped 25 basis points to 215 basis points, according to traders of credit-default swaps at Westpac Banking Corp. That is on course for the biggest daily increase since June 22 last year, according to data.

Qantas, rated BBB-minus by Standard and Poor's, is one of just two carriers, with Southwest Airlines, to be judged investment grade by more than one ratings company.