Qantas freight interests to be boxed and shipped

<p>Qantas plans to merge and then separate its freight interests as part of a major emphasis on freight in the next 12 months, chief executive Geoff Dixon said this morning (Thursday, August 17).</p> <p>Qantas chief financial officer Peter Gregg also told journalists at the release of the company’s annual results in Sydney, that it was close to ruling out buying the half of Pacific National made available by Toll’s takeover of Patrick. </p> <p>"We wouldn’t talk about it at this stage, we are pretty close to ruling it out," Mr Gregg said.</p> <p>Mr Dixon said Qantas would instead consolidate its numerous freight interests before detaching them from its other operations. </p> <p>Qantas’s international and domestic freight line haul operations, domestic airfreight terminals and its 50% stakes in Star Track Express and Australian air Express (AaE), would be gradually merged as part of cost restructuring, Mr Dixon said.</p> <p>&#8220Since 2003, we have been working towards developing our various businesses into separate segments, including engineering, airports, catering, each of the flying businesses and freight,&#8221 he said.</p> <p>Qantas’s newly-announced domestic airfreight business &#8211 Express Freighters Australia &#8211 will begin wet-leasing converted Boeing 737-300s to AaE from October this year.</p> <p>The operation will start with one of the 737-300s before expanding to four by March 2007.</p> <p>It comes as Qantas recorded a 5% rise in other revenue of $151m, $128m of which was attributed to the use of additional capacity in wet-leased freighters.</p> <p>Mr Dixon said Qantas’s interests, particularly its freight operations, had &#8220excellent growth prospects&#8221.</p> <p>In its 2005&#4706 results released today, Qantas’s net profit fell by 30% to $479.5m. </p> <p>Much of focus has been on a $1.1bn fuel bill, of which $282m was hedged.</p> <p>Fuel now accounts for $2.8bn of Qantas’s costs, up from $1.93m in 2004&#4705.</p> <p>Mr Dixon said the figure was expected to rise to $3.9bn in 2006&#4707.</p> <p>&#8220In February this year, I said our business transformation would need to be predicated on a fuel cost of above US$60 a barrel for crude oil,&#8221 Mr Dixon said. </p> <p>&#8220That figure is now more than US$70 a barrel.&#8221</p> <p>Fuel and labour now make up 60% of the company’s total costs, with 1200 retrenchments in 2005&#4706 and fuel surcharge increases helping to offset costs.</p> <p>Qantas employs about 37,000 people, costing the company $3.3bn. </p> <br />