CANBERRA Nov 2 Qantas Airways Ltd,
Australia's struggling flagship airline, said on Friday it plans
to focus on paying down debt after curbing capital spending as
part of a turnaround plan.
Chief Executive Alan Joyce reiterated that the carrier's
expenditure requirements, which have been cut sharply in recent
months, would be A$1.9 billion in 2012/13 and said they would
not exceed that level in the following year.
"As a result, we are turning our attention to paying down
debt, mindful of the volatile economic and financial
environment," Joyce told shareholders at the company's annual
general meeting in Canberra.
Qantas's net debt at June 2012 stood at A$3.15 billion,
according to Thomson Reuters data.
"It (debt level) is high for the nature of the industry.
Given the earnings currently are very low, it's not a silly move
to be looking to reduce debt," said Will Seddon, a portfolio
manager at White Funds Management, which owns Qantas shares.
"It's pretty much in line with some of their recent moves,"
Qantas, which is in the midst of a five-year turnaround plan
for its loss-making international division, has been stripping
out costs after a year troubled by a record fuel bill, rising
competition and union opposition to its spending cuts.
In May, it delayed delivery of two new Airbus 380s, taking
capex cuts to A$900 million, and in August, it cancelled orders
for 35 Boeing Co Dreamliner jets after posting its first
annual net loss in 17 years.
"We will invest only where we can be confident of
sustainable returns, and we retain the flexibility to adjust
capital expenditure as operating conditions demand," Joyce said.
Qantas last month agreed to a 10-year alliance with Dubai's
Emirates to shore up the international business,
ending a 17-year partnership with British Airways.
Australia's competition watchdog is currently evaluating the
deal, which the Australian government has said would provide
benefits for consumers and aid competition in the aviation
Qantas shares were up 0.4 percent at A$1.295 in a broader
market up 0.1 pct at 0335 GMT.