Flights cut as disasters, fuel costs hit hard

Qantas has slashed growth plans, suspended its Perth to Tokyo service and warned of management cuts as the airline grapples with the effect of unprecedented natural disasters and soaring fuel costs.

Qantas chief executive Alan Joyce yesterday blamed a $140 million hit to its bottom line from the recent natural disasters for the need to cut domestic growth from 14 per cent to 8 per cent.

It will cut international growth from 10 per cent to 7 per cent.

"There has never been a time when the world faced so many natural disasters, all of which have come at a significant financial cost to the Qantas Group," Mr Joyce said.

"We need to act decisively, just like we did during the global financial crisis, to ensure the ongoing sustainability of our business."

Mr Joyce said the Queensland floods had cost Qantas' bottom line $60 million, cyclones Yasi and Carlos $20 million, the Christchurch earthquake $15 million and Japan's earthquake and tsunami $45 million.

Mr Joyce said that the price of Singapore Jet Fuel had risen from about $US88 a barrel in September to more than $US131 a barrel.

The grounding of the A380s and the impact of that on passenger confidence has cost Qantas $80 million, although that will be recovered from Rolls Royce.

The Qantas Group will suspend four return weekly Jetstar services from Australia to Japan until the end of August and suspend the Perth to Tokyo route from May 8, and reduce other services.

Air traffic to Japan has declined by 25 per cent since the earthquake, prompting most airlines to pare back services.

The airline will also cut domestic New Zealand flights as that economy reels from the impact of the Christchurch earthquake.

The price of fuel was of deep concern to airlines with speculators driving up the price, making hedging difficult.

Qantas had already increased domestic airfares and international fuel surcharges in February and March, and Jetstar increased fares in some domestic and international markets.