Airline giant Qantas has said it will cut capacity on domestic and international services and retire some aircrafts as it attempts to deal with rising fuel costs.
The company announced this morning that capacity growth on its domestic flights will be cut to 8%, from 14%, in the second half of 2011.
“There has never been a time when the world faced so many natural disasters, all of which have come at a significant financial cost to the Qantas Group,” chief executive Alan Joyce said in a statement.
“We need to act decisively to respond to rising fuel costs and natural disasters, just like we did during the global financial crisis, to ensure the ongoing sustainability of our business.”
Joyce said there would also be redundancies, although these would be restricted to management positions.
“We want to limit redundancies wherever possible and will be using a range of initiatives to manage the reduction in capacity including annual and long service leave,” he said.
However, Joyce also added that it is too early to determine how recent natural disasters will impact the company’s second-half results.
Global mining giant Rio Tinto has said it will continue with its $3.9 billion takeover offer for Riversdale Mining, saying it would so even if it gets a minority stake.
The deal was conditional on getting 50% acceptances, but so far it has only been able to get 41%. Rio was involved in negotiations with Brazil steel company CSN yesterday, which says it is still in talks with Riversdale.
“(CSN) wants to keep (the asset) and we recognise the need to have a strong operating partner with ability,” chief financial officer Paulo Penido Marques told analysts, according to Reuters.
The Australian sharemarket has opened slightly higher today, following weak but positive leads from Wall Street overnight.
The benchmark S&P/ASX200 index was up 41 points or 0.87% to 4797 at 12.10 AEST, while the Australian dollar continued its upward push to $US1.029.
AMP shares gained 1.66% to $5.46, while Commonwealth Bank shares rose 0.46% to $52.08. ANZ shares rose 1.23% to $23.80 as Westpac rose 0.58% to $24.23.
On Wall Street, stocks rose despite confusion over the nuclear disaster in Japan and ongoing unrest in the Middle-East. The Dow Jones Industrial Average gained 81.13 points or 0.67% to 12,279.01.
Both Greece and Portugal have been downgraded by Standard & Poor’s, which cited risks the countries’ debts could be repaid at a different rate than first thought.
Portugal’s rating has been put at slightly above junk, while Greece’s debt rating has dropped below Egypt’s.
“Our view is that this really is a game changer,” S&P analyst Frank Gill told journalists, regarding the discussion over European bailouts last week.
“We do think it is clearly negative for holders of commercial debt, that is our view, that it will weigh on countries’ capacity to serve their commercial debt,” he said.
Shopping centre giant Westfield Retail Trust has said it has begun the redevelopment of the Westfield Fountain Gate shopping centre in Melbourne, with the $320 million bill to be shared between itself and the Westfield Group.
The company said its half share of the cost would provide a yield of between 7-7.5%, while forecasting an internal rate of return between 12-15%.
“Westfield Fountain Gate is an asset located in a high growth trade area and its performance has been strong over many years,” managing director Domenic Panaccio said in a statement.
Patrick Stafford is a freelance journalist and a former deputy editor of SmartCompany.
