Qantas shares soar as jet fuel costs fall

SYDNEY - Shares in Australia's biggest airline, Qantas Airways, rose almost 6 per cent yesterday, bolstered by sliding jet fuel prices and the chance of domestic domination after the demise of Ansett Australia.

Shares in the airline increased 20c, or 6.9 per cent, to $A3.09 by the close of trade, outstripping a 1.3 per cent gain in for the rest of the market.

"Qantas is quite highly correlated to the price of oil - that would certainly be one of the reasons," said ABN Amro aviation analyst Bruce Low.

"Despite the fact that the general industry looks pretty bad, once the dust finally does settle it's going to come out stronger.

"It's cleaning up domestically at the moment."

Global airline stocks have bounced back after European governments bridged the gap in war risk insurance.

United States carriers have also moved closer to getting the cash they desperately need for survival.

But the outlook for the global aviation sector remains cloudy as the fallout from the attacks by terrorists in the United States continues to hurt the industry.

Qantas, 25 per cent owned by British Airways, has boosted services to meet extra demand since Ansett Australia was grounded this month.

It had been negotiating with aircraft manufacturers and Ansett administrators to obtain additional capacity but talks fell through yesterday.

- REUTERS

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