Qantas slashes first class as profits slide

Qantas slashes first class as profits slide

Qantas Airways is cutting first-class seats from all but a few routes following a 72 percent slump in profits.

The Australian flag carrier blamed the figures on falling customer demand and said it was also scrapping dividend payments.

Chief executive, Alan Joyce, said: “Maintaining a first class offering on flagship routes is essential for Qantas as a premium airline. It is vital that we align this offering with forecast demand which is expected to be relatively slow compared to business, premium economy and economy.”

First class would only be kept on flights from Australia to London, via Singapore, and between Australia and Los Angeles after demand fell dramatically due to the downturn.

He said: “Our first class product will remain on key routes. It’s a re-balance - there are more business class seats and less first class seats.”

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“The reconfiguration is driven by the longer-term trend of what we believe is happening in demand.”

“The long-term trend in first class has been for a decline. Our seat factor [load] in first class has been below 40 percent, so we have plenty of room to cope with all expected future demand,” he added.

Qantas will reconfigure 29 planes and upgrade in-flight entertainment at a cost of AU$400m (£229m), leaving first class on just 12 Airbus A380s.

The premium cuts come in the same week as new data from the International Air Travel Association (IATA) painted a gloomy long-term picture for the sector. It cautioned that even though premium travel has risen 11 per cent since a May 2009 low, levels in December 2009 were still 17 per cent below highs recorded in early 2008.

Qantas’ net income for the six months to 31 December 2009 slumped to A$58m or £33m, down 72 percent from A$210m year-on-year.

However Joyce said he was pleased the airline had remained in profit during the downturn, unlike other carriers.

He said: “While the operating environment has been unprecedented and challenging, this result reflects the strength and diversity of our operations.”

Qantas partly blamed weaker demand for the fall in profit, which came despite sharply lower fuel costs and an efficiency drive that pared operating expenses by 11 percent.