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Qantas profit plunges on fuel billBy Geoff Hiscock, CNN  CEO Geoff Dixon said fuel costs and the uncertain security environment were challenges for Qantas. YOUR E-MAIL ALERTSSYDNEY, Australia (CNN) -- Australian carrier Qantas has posted a 30 percent fall in net profit after higher jet fuel prices, restructuring and security requirements pummelled its costs. Jet fuel alone added more than $660 million to its 2005-06 costs. Qantas, which has been one of the world's most profitable airlines in recent years, said Thursday its net earnings for the year to June 30, 2006 plunged 30.4 percent to A$480 million ($370 million), compared with A$688.5 million a year earlier. Revenue rose 8.6 percent to a record $10.2 billion. The airline also incurred about $140 million of restructuring costs under a five-year program designed eventually to save about $2.2 billion. The profit decline, flagged in June by the airline, was in line with the average of analysts' expectations. Qantas shares finished more than 5 percent higher at A$3.29 on Thursday. They had fallen 27 percent in the first half of the year. Qantas CEO Geoff Dixon said that along with the uncertain security environment, the cost of fuel remained the biggest challenge for the aviation industry and for Qantas. He said fuel costs for Qantas in 2005-06 rose 45 percent to $2.1 billion, and the airline was predicting a total fuel bill in 2006-07 of $3 billion. "In February this year, I said our business transformation would need to be predicated on a fuel cost of above $60 a barrel for crude oil. That figure is now more than $70 a barrel," Dixon said in a statement accompanying release of the results. Spending on securityHe said Qantas had also spent more than $750 million since 2001 on security and related insurance. The air terror scare in the UK last week meant that security would continue to be "an increasing and significant cost" for the group. Dixon said Qantas would cut more than 1,000 management and support positions in 2006-07, incurring a restructuring cost of about $150 million. He said Jetstar, the budget carrier that Qantas set up in May 2004 to compete with Virgin Blue in Australia, would continue to expand its operations into Asia from Australian cities. It is also integrating the Singapore-based Jetstar Asia into its long-haul operations. In April this year, Qantas said Jetstar would begin flights in November to six Asia-Pacific destinations: Bangkok, Phuket, Osaka, Ho Chi Minh City, Bali and Honolulu. Dixon said Thursday that Qantas also planned to develop new international point-to-point services in growth markets such as China. The airline will take delivery of its first Airbus A380 super-jumbo in late 2007 and will also introduce the Boeing 787 Dreamliner in 2008. Qantas said its pre-tax profit of A$671 million recognized A$104 million in liquidated damages from Airbus due to the delayed delivery of the A380. Aviation industry consultant Peter Harbison, executive chairman of the Center for Asia Pacific Aviation, said Thursday the result underscored the importance of Jetstar to the group's future prosperity. Harbison said Qantas was increasingly well placed to take part in Asia's growth though its Jetstar strategy, which he said would see greater coordination between the various Jetstar units in the months ahead. 
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