Leasing Australasian airline Qantas has warned passengers prices are likely to increase as it battles against rising fuel costs.

Alan Joyce, the chief executive of Qantas, confirmed at the IATA annual conference in Singapore earlier fare increases and surcharges still do have not cover fuel costs with the airline considering further increases in the future to make up the shortfall.

The news comes at a worrying time for the global aviation industry, with IATA itself today revealing it expects profits of just $4 billion for the entire aviation industry in 2011.

On expected revenues of $598 billion, a $4 billion profit equates to a 0.7 per cent margin, IATA added.

Airbus A380

Australia’s biggest carrier also confirmed it had replaced 24 engines on its fleet of Airbus A380 superjumbos.

The action follows a midair explosion near Singapore last year.

The A380 damaged in November’s incident is expected to return to service by February after repairs costing A$100 million are completed.

Costs will be met by Qantas’ insurers.

Earlier, Joyce had told reporters Qantas is expecting a minor delay on the delivery of two new Airbus A380 superjumbos as engine maker Rolls-Royce continues to resolve a disruption caused by an engine blow-out last year.

Malaysia Airlines

Also at the IATA conference earlier, Qantas revealed it would sponsor the entry of Malaysia Airlines into the oneworld alliance.

It is hoped the decision will boost the Australian flag-carrier’s profile in Asia.

Last year, Malaysia Airlines was recognised as the World’s Leading Airline to Asia by the prestigious World Travel Awards.