Despite signs that the economy is improving, the aviation industry is still struggling, as budget airline Virgin Blue saw its first annual loss and Air New Zealand and Qantas both announced a 90 percent drop in profit.
Qantas last week reported a 90 percent plunge in profits, recording a net profit of $117 million for the year ending June 30, down from $969 million on the previous year. This week, Air New Zealand have announced a 90 per cent fall in tax profit to $25 million, while Virgin Blue Australia announced a net loss of $160 million for 2009, suffering from higher fuel costs and the launch of international arm V Australia.
The Association of Asia Pacific Airlines says it will be some time before airlines get back on their feet again, with major carriers facing major overhauls to stay afloat. In order to stem the loss of profits, Qantas has announced it will embark on a major cost cutting strategy Q Future, while Air New Zealand is planning to cut seats on long haul services.
Peter Harbison of the Association of Asia Pacific Airlines said airlines cannot afford to “hold their breath long enough for things to get better” and has urged them they need to make drastic changes in order to stay afloat.
People who read this, also liked:
Air ticket sales plunge, swine flu and economy to blame
Qantas cuts costs amid declining profits