Qantas denies downgrade

Qantas Airways denied a newspaper article suggesting it could downgrade its profit forecast as early as tomorrow, saying it would meet market expectations for the year to June 30, 2005.

The Sydney Morning Herald said yesterday there was mounting speculation Qantas could announce a profit downgrade.

That was "incorrect", Qantas said in a statement to the Australian Stock Exchange yesterday.

Net profit at Qantas is expected to rise 14 per cent to A$737.5 million ($801.5 million) in 2004/05, according to the average of five analysts surveyed by Reuters.

For fiscal 2006, the average expected net profit eased to A$689 million.

Airlines globally are struggling with record fuel prices as oil nears US$60 a barrel. Fears of winter shortages have pushed speculators to buy into oil futures contracts for delivery later in the year, sending forward prices on crude, heating oil and London gas oil to record highs.

Local media have speculated that Qantas, which employs more than 35,000 people in Australia, may shed 3000 to 5000 jobs.

Qantas chief executive Geoff Dixon has said it is "inevitable" that a review to slash costs and boost productivity will result in "further change" and "this could involve some redundancies".

* Australia hasn't permanently ruled out giving Singapore Airlines permission to fly between Australia and the US, says Prime Minister John Howard.

The Government last week said it wasn't the right time to let Singapore Air fly direct from Australia to the US, protecting Qantas from competition on a route that accounts for about 10 per cent of its annual profit.

Singapore Air wants access to more routes as it faces extra competition from low-cost carriers.

"The idea that we have shut the door permanently on some kind of accommodation in relation to Singapore Airlines isn't correct," Howard said. The issue would not be decided "in the next few weeks, but the whole question has not finally been taken off the table either".

United Airlines is the only other carrier to fly Australia-US direct.

Howard said any decision on access needed to consider whether Singapore Air and Qantas remained "separate companies for an indefinite period of time".

Both airlines said on Tuesday they had no plans to merge.

- REUTERS, BLOOMBERG