Qantas flags $300m first-half loss

Shares plunge as airline blames fundamentally changed market conditions, flags 1000 job cuts, warns of CEO and board pay cut.

Qantas Airways (QAN) has flagged an underlying loss before tax of $250 million to $300 million in the six months ending December 31.

At 1040 AEDT investors pushed Qantas shares 14.11% lower to $1.035, against a benchmark index fall of 0.38%.

In a statement to the Australian Securities Exchange, Qantas also warned of a head cut reduction of at least 1000 positions in 12 months, as well as a pay cut for its chief executive officer and board.

Qantas said it will make accelerate cost reductions across all areas of the business, totalling $2 billion in savings over three years.

The airline flagged a pay freeze and no fiscal 2014 bonus for executives, further overhead reductions, a review of spending with top 100 suppliers, network optimisation and improved fleet utilisation.

The airline blamed a marked deterioration in trading conditions in November, with passenger loads and yields "below the already negative trends for the year to date".

The group also flagged a capital expenditure and structural review in response to fundamentally changed market conditions.

In other guidance for the first half of fiscal 2014, Qantas said group capacity was set to increase by 1.1%, total domestic market capacity was set to rise by 2.7% and group yield was expected to fall by 3.5% excluding the impact of foreign exchange movements.

Underlying fuel costs for the first half are expected to rise $88 million to $2.27 billion in the half, compared with the previous corresponding period.

Qantas said the outlook for the second half of fiscal 2014 remains volatile and it was not possible to provide guidance for this period given the uncertainty in global economic conditions, fuel prices and foreign exchange rates.

Qantas chief executive officer Alan Joyce said discussions with the federal government about support for the airline would be key in helping the business keep competing effectively on a level playing field, but warned this was not enough.

"None of the measures being discussed with the government would alleviate the need for us to take the comprehensive actions we have announced today," Mr Joyce said

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