Qantas expects to increase airfares, delay on A380 orders

Qantas Airways Ltd said it expects to increase airfares to cover soaring fuel costs while the delivery of two Airbus A380 aircraft is likely to be delayed by two to three months. Higher jet fuel prices have hurt global airlines and the International Air Transport Association (IATA) on Monday cut its 2011 profit forecast by more than half on the back of high oil prices and turmoil in Japan, North Africa and the Middle East.                                          

"We have gone through now a number of fare increases and fuel surcharge increases," Alan Joyce, the chief executive of Qantas, told Reuters on the sidelines of the IATA annual general conference underway in Singapore. He said the increases have still not recovered the additional fuel costs and the airline was looking at more increases going forward to cover it. Hedging just gives you time.                                          

The IATA, which represents most global carriers, said it expected an overall industry profit of $4 billion in 2011, down from a previous forecast of $8.6 billion. That would be down more than three-quarters from the industry's estimated 2010 profit, which was raised to $18 billion from $16 billion. Joyce also said 50% of the fuel purchases for Qantas have been hedged for the next financial year that starts July 1.                                                                                                                           

Earlier, Joyce told reporters that Qantas is expecting a minor delay on the delivery of a "couple" of Airbus A380 superjumbos as engine maker Rolls-Royce continues to resolve a disruption caused by an engine blowout last year.                                           

A Qantas A380 with 466 people on board made an emergency landing in Singapore on November 4, after one of its Rolls-Royce Trent 900 engines partly disintegrated in mid-flight after an oil fire, resulting in the grounding of its A380 fleet for a few weeks.                                           

Joyce said the stricken A380 plane was still being repaired in Singapore and would be there until early next year. The repair bill is expected to top A$100 million ($107.2 million), which will be covered by insurance.                                           

"We have minor delays because we took engines off the production line to put on the aircraft that are operating at the moment," Joyce told reporters. He said the delay is expected to be between two to three months and will only affect the "next couple" of aircraft. Qantas has taken delivery of 10 of its 20 A380-800 aircraft and has replaced more than 24 Rolls-Royce engines on the its superjumbos.                                           

Joyce also said the Australian flag carrier is considering the Airbus A320neo for its budget carrier operation, Jetstar. Cathay Pacific also said it may buy the new generation of fuel efficient single aisle aircraft.