Qantas to cut capacity, reduce management to offset fuel

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SYDNEY (Reuters) - Australia's Qantas Airways <QAN.AX> plans to axe capacity and management jobs and retire some aircraft early under cost-cutting measures aimed at offsetting soaring fuel prices and the impact of natural disasters in Japan, New Zealand and Australia.

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Qantas shares rose almost 2 percent after the airline announced a string of cost cuts, including the suspension of some services from Australia to Japan and New Zealand.

"We want to limit redundancies wherever possible and will be using a range of initiatives to manage the reduction in capacity including annual and long service leave. At this stage only management positions will be made redundant," Joyce said in a statement.

Qantas shares were trading 1.9 percent firmer at A$2.19 shortly after the market opened. Some investors had been expecting an earnings downgrade after rival Virgin Blue <VBA.AX> cut its forecasts a week earlier.

Qantas did not give full-year earnings guidance but said a string of recent natural disasters would impact its underlying pretax earnings by about A$140 million ($144 million)in the second-half of the financial year ending June 30, 2011.

This included a A$45 million impact from the Japan earthquake and tsunami, A$60 million from flooding in Australia's Queensland state, A$20 million from cyclones in Queensland and A$15 million from last month's earthquake in New Zealand.

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Qantas said it planned to cut domestic capacity growth in the second-half of the current financial year from 14 percent to 8 percent and international capacity growth from 10 percent to 7 percent.

Qantas and other airlines globally have been raising fares and introducing fuel surcharges to try and offset rising oil prices.

($1 = 0.972 Australian Dollars)

(Reporting by Michael Smith; Editing by Ed Davies)

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