Qantas Adjusts Capacity, Capital Expenditure to Match Demand

Sydney, 15 June 2011

The Qantas Group today announced an adjustment in planned domestic capacity growth and a corresponding reduction in capital expenditure for the next two years.

In response to slower overall growth rates in the domestic market, the Qantas Group is now targeting 5.5 per cent domestic capacity growth for 2011/12 compared with the 8 per cent planned previously. Capital investment will be reduced significantly, as follows:
- Reduction in capital expenditure for the second half of 2010/11 of $100 million.
- Reduction in capital expenditure for 2011/12 of $300 million.
- Reduction in planned leased aircraft commitments for 2011/12 of $300 million.

The Qantas Group now expects to take delivery of 34 aircraft in 2011/12 compared with 43 previously planned deliveries. Orders for 12 narrow-body jet aircraft will be cancelled or deferred, including three aircraft in the second half of 2010/11.

Qantas Chief Executive Officer, Mr Alan Joyce, said the measures would help maximise the Qantas Group’s competitive position in the domestic market.

“The Qantas Group has always taken decisive action to match capacity to demand,” Mr Joyce said.

“With Qantas continuing to lead the premium market and Jetstar offering consistently low fares in the leisure market, we are well-placed to retain our profit-maximising 65 per cent domestic market share. Our extensive fleet renewal strategy will support growth and improve product for both airlines.”

With operating cashflow and key credit metrics strengthening this financial year, a cash balance of more than $3 billion and the flexibility to reinstate or further reduce capital investment as appropriate, the Qantas Group remains in a strong funding position. The Group has mandated financing in place for its 2011/12 aircraft deliveries and intends to fund the balance of its future capital commitments from operating cashflow, cash reserves and available debt.

Qantas is the highest-rated airline in the world with a BBB/Baa2 investment grade credit rating.

Issued by Qantas Corporate Communication (5126)