Qantas sheds 1,500 jobs as oil price bites

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Qantas announced 1,500 job cuts yesterday as the Australian carrier joined the roll call of airlines slashing staff to cope with soaring fuel prices.

The airline is cutting 4 per cent of its workforce and scrapping its growth plan for the coming year, warning that the business would be at risk if it fails to offset soaring fuel prices.

The plan was Qantas's fifth belt-tightening in three months. It had already raised fares twice and cut capacity twice.

Analysts said it was difficult to tell if this would be the end of the cost-cutting. "Jet-fuel prices are extravagantly high around the world and the unknown is how much people are going to cut back on their air travel in this weaker climate," said Angus Gluskie, a portfolio manager at White Funds Management.

The global airline industry faces what it calls a "perfect storm" of skyrocketing oil prices, with carriers worldwide shedding thousands of jobs and closing down routes as losses mount, threatening some of them with insolvency. "This is one of the toughest industries out there," said Geoff Dixon, Qantas's chief executive. Qantas also cut its forecast capacity growth for 2008/09 to nil, from 8 per cent, and said it would shut call-centres in Tucson, Arizona and London.

The news comes a day after the Irish airline Ryanair blamed the soaring oil price for its dec-ision to cut 14 per cent of its flights from Stansted airport this winter.

American Airlines and Continental Airlines in the United States also posted heavy losses this week. Soaring fuel costs have prompted the airline industry in the US to cut more than 20,000 jobs this year, according to a rep-ort by employment consultancy Challenger, Gray & Christmas.

At least seven smaller airlines in the US have filed for bankruptcy or stopped operating this year, with Julius Maldutis of the consulting firm Aviation Dynamics predicting a further nine or 10 will file for bankruptcy protection this autumn.

Airlines stand to lose more than $6bn (£3bn) this year if fuel costs remain high, the International Air Transport Association said.