ASX Release

Sydney, 21 June 2006

Qantas Airways said today that its full year profit for 2005/06 would be at the lower end of analysts' forecasts.

The Chief Executive Officer of Qantas, Mr Geoff Dixon, said the current range of analyst forecasts was between $670 million and $895 million profit before tax and after restructuring costs.

Mr Dixon said that, at this stage, after restructuring costs of approximately $153 million, the profit before tax would be around $670 million.

"We have advised the market since reporting a 2004/05 profit before tax of $914.3 million (adjusted for Australian equivalents to International Financial Reporting Standards) that we would not achieve the same level of profitability in 2005/06," Mr Dixon said.

"This position has been reinforced by a $1 billion increase in fuel costs for 2005/06 after hedging, a significant amount of which will not be recovered by surcharges."

Mr Dixon said Qantas had also decided not to sell its Catering operations, the expected proceeds of which had been included in its 2005/06 forecast.

"The offers we received for our Catering business did not represent good value compared to the benefits we expect to achieve by retaining the business and restructuring it," he said.

The restructure of Qantas Catering will initially provide improvements in Earnings Before Interest and Tax (EBIT) in excess of $15 million per annum. (See separate release.)

Mr Dixon said Qantas was making solid progress towards its target of $3 billion of benefits through Sustainable Future for the five years to June 2008.

"These reforms will lead to an improved cost structure in future years. However, if fuel prices continue at this level, further restructuring will be required," he said.

Issued by Qantas Corporate Communication (3443)