QANTAS CUTS ROUTES AND STAFF DUE TO FUEL COST!

SYDNEY : Australian airline Qantas on Wednesday said it would slash capacity by five percent by cutting routes, services and jobs and retire several aircraft to cope with soaring fuel prices.

Chief executive Geoff Dixon said the airline's fuel bill would increase by more than 2.0 billion dollars (US$1.9 billion) in 2008/09, representing about 35 percent of the company's total expenditure.

In response, Qantas would cut capacity by about five percent -- the equivalent of grounding six aircraft, he said.

"Despite our fuel hedging strategy, fuel surcharges, two separate across-the-board fare increases and a recruitment freeze, we are not bridging the widening gap between the actual increase in the cost of fuel and the amount we offset," Dixon said in a statement.

"Qantas remains a fundamentally strong company, with a good balance sheet and a commitment to investment that includes a 35-billion-dollar order for aircraft," Dixon said.

"We must make these hard decisions now, however, if we are to ensure the ongoing strength of Qantas, preserve the jobs of the vast majority of our current workforce, and position ourselves for growth when the trading environment improves." ,,,CNA