Up to 500 jobs are to be lost at Qantas as the airline revealed a 83% slump in first-half profits.
The Australian airline blamed rising fuel costs and a series of strikes that temporarily grounded its fleet last October for the loss.
Underlying pre-tax profit for the six months to December 31 was A$202 million, a drop of A$215 million over a year earlier.
The result reflects the A$194 million financial impact of industrial action. Fuel costs in the six months were up by A$444 million of 26% to A$2.2 billion.
The carrier said it would cut 500 jobs, withdraw some international flights and revamp its catering and engineering businesses to cope with the financial challenges.
Services being cut include the previously-announced withdrawal from the Hong Kong-London and Bangkok-London routes from next month.
Qantas described the operating environment and economic outlook as being “challenging and volatile”.
CEO Alan Joyce said: “While we have a strong outbound travel market, the inbound market is flat and in particular there is a softening of demand for travel out of the UK and Europe.
“The challenges are structural and ongoing which is why last year we developed our five year plan for building a better and stronger Qantas.”
He added: “The highly competitive markets and tough global economy in which we operate mean that we must change. We need to be ready to take tough decisions, and we must become more flexible and productive.”
Qantas plans to cut A$700 million (£477 million) in capital expenditure over two years.
“The highly competitive markets and tough global economy in which we operate mean that we must change,” Joyce said. “We need to be ready to take tough decisions, and we must become more flexible and productive.”
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