Qantas Airways Limited, the national carrier of Australia, has announced that it would shut down some flight routes, retire aircraft and shed jobs in its effort to check costs as prices of aviation fuel keep rising. The airline said in a statement that, in the 2008-2009 financial year, it faces an increase in its fuel bill amounting to Australian $2 billion (US $1.9 billion; €1.2 billion).

In the statement, Geoff Dixon, chief executive officer of Qantas Airways, said: “Despite our fuel-hedging strategy, fuel surcharges, two separate across-the-board fare increases and a recruitment freeze, we are not bridging the widening gap between the actual increase in the cost of fuel and the amount we offset.”

The decision to cut capacity by 5% is equivalent to grounding 6 aircraft.

Based in Sydney, with its main hub at Kingsford Smith International Airport, Qantas is Australia’s biggest airline.

Qantas plans to retire one Boeing 737 aircraft, ground two Boeing 767 aircraft and one A320 plane of Jetstar Airways, a subsidiary of Qantas and a low-cost airline based in Melbourne.

The airline will also cancel the delivery of one Jetstar A321 plane as well as “move faster toward retiring four Boeing 747-300 aircraft, which currently operate to and from Perth, by December 208,” Dixon said in the statement.

He explained: “Flying patterns of other aircraft will be adjusted, which include reducing the use of the B747-400 fleet. This will enable us to make significant changes to domestic and international flying for both Qantas and Jetstar. In some cases, this will involve pulling off routes entirely; in other cases, we will scale back frequencies and capacity.”

Qantas will cut back some routes in Australia: It plans to exit the Gold Coast-Sydney and Ayers Rock-Melbourne routes and reduce Ayers Rock-Sydney services from August 2008.

Jetstar Airways will wind up its Sydney-Whitsunday Coast, Adelaide-Sunshine Coast, and Brisbane-Hobart routes from July 2008.

Jetstar will also decrease the number of services on some Adelaide, Avalon and Cairns routes by August 2008.

The statement from Qantas went on: “The airline is finalising details of its international network restructure, including capacity adjustments and market exits, and would announce these within the next week. Qantas remains a fundamentally strong company, with a good balance sheet and a commitment to investment that includes a $35 billion order for aircraft.”

Australia’s newspaper International Herald Tribune quoted an analyst as commenting on the moves by Qantas: “The plans by Qantas reflects moves by other airlines across the globe. Worldwide, you have seen a number of airlines talk about capacity cuts – in the United States, New Zealand, Europe and Asia. The simple fact is that because of rising fuel prices, they need to push up ticket prices. But, airlines are having difficulty doing that in a softening economic environment, so they have to combine price increases with cutbacks in capacity.”