UPDATE 1-Qantas plans to cut debt by $935 mln by fiscal 2015

Wed May 7, 2014 10:28pm EDT

Related Topics

* Reduction to come partly from streamlining of fleet

* Investment cutback and asset sales to help cut debt (Adds Qantas CEO comments, company context, share move)

By Maggie Lu Yueyang and Byron Kaye

SYDNEY, May 8 (Reuters) - Qantas Airways Ltd chief executive Alan Joyce said the Australian carrier plans to cut debt by over A$1 billion ($935 million) by fiscal 2015 to strengthen its balance sheet amid intensifying competition that has squeezed it into losses.

Qantas plans to reduce debt by streamlining its fleet of aircraft, scaling back investment and selling assets, Joyce said on Thursday in a presentation at an investment conference in Sydney.

Joyce said Qantas expects to cut gross debt to less than four times of adjusted earnings before interest, taxes, depreciation, and amortization by fiscal 2017.

Qantas said in February it would cut 15 percent of its workforce, reduce spending and sell less fuel-efficient, older planes after posting what was only its second half-yearly loss since privatisation two decades ago.

Joyce said on Thursday the airline remains committed to the cost-cutting plan, designed to save A$2 billion in the next three years.

The CEO said the company had already seen benefits from measures such as closing an aircraft maintenance base in Avalon, Victoria in March, and cutting its Perth-Singapore route, freeing up newer, more efficient aircraft for busier routes.

Asked if Qantas would sell its lucrative frequent flyer programme, Joyce said, "We're still working through that." He said the airline wouldn't sell assets if deals did not improve the company's financial position.

Qantas shares climbed 2.1 percent to A$1.25 as of 0144 GMT, outperforming a 0.5 percent gain in the broader market. They have plunged over 30 percent over the past year, against a 5.2 percent rise for the index.

($1 = 1.0713 Australian Dollars) (Reporting by Maggie Lu Yueyang and Byron Kaye; Editing by Edwina Gibbs and Kenneth Maxwell)

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