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Outgoing Qantas boss says merger is inevitable

Outgoing Qantas boss says merger is inevitable

Australia's national airline Qantas will undoubtedly merge with another carrier in the future, the company's outgoing chief executive said Friday.
Geoff Dixon said consolidation was already occurring within the industry as airlines struggle against falling demand and rising fuel costs, and called for a "level of maturity" in any discussion of a potential merger.
"The airline industry is very fragmented. It is hugely capital intensive. Other airlines are starting to merge and we must be part of that," Dixon told the Australian Broadcasting Corporation.
"It doesn't mean the brand will go. It will be probably very similar to what it is now. But people have got to understand that this will happen."
Dixon would not name any possible suitors but Singapore Airlines has been named as a potential partner in the past.
"I am not saying there is anybody out there at the moment," the chief executive said. "All I am saying is that many airlines are now merging in situations where they probably would not have considered it three or four or even five years ago."
Dixon said Qantas was about the 10th largest airline in the world but would still not be big enough, in the next five or 10 years, to carry on without a merger. "I believe it will be sooner rather than later," he said.
On Thursday, Qantas reported a 44 percent increase in annual net profit to a record 969 million Australian dollars (US$842.6 million) despite high fuel prices and other woes.
The results came in the same week that Australia's second-largest airline Virgin Blue reported a 55 percent fall in net profit for the year ended June 30 due to the rising cost of fuel.
Dixon said that while the cost of oil was "incredible" at the moment, Qantas was better placed than Virgin Blue because of its larger size and the strength of its brand globally.
But he said the airline was in a position of volatility because of the fluctuations in the price of oil, which hit a record high of 147 U.S. dollars a barrel last month.
"We have to manage the business almost on an hour-by-hour basis," he said. "And it is really, really difficult."
Qantas has slashed 1,500 jobs worldwide and introduced other measures to combat the challenging market conditions.
Dixon rejected criticism that cost-cutting was to blame for a series of safety incidents, including a mid-air blast believed to be caused by an exploding oxygen cylinder which blew a hole in the fuselage of a plane and caused an emergency landing in Manila in July.
Qantas did not cut back on safety, customer service or training, he said.
Dixon, who last year supported a failed private equity takeover of the airline, steps down in November. He will be replaced by Alan Joyce, who currently heads the airline's budget offshoot Jetstar.


Updated : 2021-05-17 22:13 GMT+08:00