Qantas raises fuel surcharge on rising fuel bill

Sydney, Aug 1: Australian airline Qantas Airways Ltd. said on Wednesday it would raise the surcharge on tickets for international flights from next month following a surge in jet fuel prices.

Qantas, which is considering restructuring the ownership of key businesses following a failed takeover, said its fuel bill for the current fiscal year would be A0 million (6 million) higher than a year ago.

Surcharges, introduced by airlines globally several years ago to counter a spike in oil prices, would rise by A to A on international one-way flights. Surcharges on domestic Australian and New Zealand operations would not change.

Qantas raised the surcharge for tickets issued from Aug. 9, following a similar move by Singapore Airlines last week, after jet fuel prices spiked to almost US a barrel.

Fuel aside, Qantas Chief Executive Geoff Dixon was bullish on the airline's prospects on Wednesday, saying it was on track to meet cost-savings targets and to report very strong full-year earnings results in two weeks.

Australia's biggest airline has been considering options for a major restructure, an idea inherited from a private equity consortium which failed to secure a US billion takeover for the company in May.

Dixon reiterated the airline was reviewing the ownership of key assets, including its frequent flyer programme and freight business, but said it did not plan to sell-off any units.

''I don't think there would be any chance of us doing anything that would make us lose control of any of these businesses,'' Dixon said.

''We do not see Qantas becoming a shell.'' Analysts and local media reports said this week Qantas may create four separate units by forming a new aircraft leasing unit and separating its frequent flyer programme and freight assets from the main airline business.

Dixon said not to expect one sweeping announcement but a staged restructure which could take months.

He said Qantas would use its low-cost subsidiary Jetstar as its vehicle to expand in Asia, where he expected the airline to grow through acquisitions and partnerships.

It was also looking at freight opportunities in Asia, he said.

Qantas was also looking at options for its frequent flyer programme, including reviewing its ownership, broadening partners and introducing a Jetstar loyalty programme next year.

Dixon pointed to tough competition from new entrants into the domestic market such as Singapore's Tiger Airways and on long-haul from Middle Eastern carriers. He said Qantas would aggressively defend its 64 percent domestic market share.

Dixon said Qantas, which has A billion of new aircraft on order, said it was still very interested in the Airbus A350 extra wide body jets.

The airline is also seeking a new chairman after Margaret Jackson said she would step down amid heavy criticism of the way management handled the A.45-a-share bid by a group including Macquarie Bank Ltd and private equity firm TPG [TPG.UL].

Qantas reports full-year earnings on Aug. 16.

Qantas shares were trading 2.8 percent weaker at A.58 at 0435 GMT, in line with a weaker broader market down 2.7 percent.

Reuters >