Australia's Qantas announced more job cuts, slashed its profit forecast by more than half and deferred new plane orders on Tuesday, saying it had no choice if it hoped to weather the global downturn.
The flag carrier said it would get rid of up to 1,750 jobs and now expected full-year profits of 100-200 million Australian dollars (73-146 million US) -- sharply down from the 500 million dollars it predicted in November.
"The size of the cuts really surprised the market, although the fact that there was a profit downgrade did not," said Julia Lee, an analyst with Bell Direct, as shares in the airline plunged more than eight percent.
"People did not expect the cuts to be so deep," she told Sky Business.
It was the third round of job cuts in less than a year, and Qantas chief executive Alan Joyce said the airline was responding to a "rapid and significant deterioration" of market conditions in the past few weeks.
"We have no choice but to lower our profit forecast and make major changes to ensure Qantas can weather the current commercial environment," he said, warning the profit guidelines could be cut again if conditions worsened.
He said international routes and cargo business had borne the brunt of the downturn, and that it would have been "irresponsible" just to cut ticket prices in the hope of attracting more passengers.
"Qantas revenues have come under severe pressure, so it would be irresponsible to rely solely on stimlating demand through attractive procing given the potential for unprecedented reductions in yield."
The airline said it had deferred orders for four Airbus A380s, the new superjumbo that is the world's largest passenger plane, and 12 Boeing 737-800s, and was in talks to delay delivery for 15 Boeing 787 Dreamliners.
It also said it would reduce capital expenditure by at least $800 million in 2009-10 and reduce capacity by a further five per cent, on top of reductions totalling nine percent announced in 2008.
In addition, it will ground the equivalent of 10 aircraft and make them available for sale, the carrier said.
The job cutbacks will involve slashing 500 management jobs and Qantas said a further 1,250 full-time equivalent positions may have to go to protect the airline's long-term viability.
Qantas slashed 1,500 positions in July last year and 90 senior management jobs last month.
Australian Deputy Prime Minister Julia Gillard said the government would do what it could to help Qantas workers who lost their jobs.
"Clearly this is very unwelcome news and it's going to be very distressing for those Qantas workers who are shortly to be told that they have been made redundant," she told reporters.
Qantas shares were down 8.4 per cent at 1.795 Australian dollars after the announcement.
The profits forecast represents a massive turnaround from the company's record pre-tax profit of $1.41 billion for the financial year that ended in June 2008.