Qantas will cut at least 1000 jobs as it works to save $2 billion over the next three years after announcing it expects to post a half-year loss of up to $300 million.
The airline on Thursday flagged an underlying loss of between $250 million and $300 million for the six months to December 31.
The news resulted in Qantas shares dropping almost 17 per cent to $1.00 as of 1120 AEDT.
Chief executive Alan Joyce said the airline was facing the toughest market conditions it had ever faced.
“We will focus relentlessly on cutting costs and improving productivity, while maintaining our competitive advantages as a business,” Mr Joyce said in the statement
The cost cutting with see at least 1000 jobs go in the next 12 months, while Mr Joyce and Qantas board members will take a pay cut.
Executives also have their pay frozen, with no bonuses to be paid this financial year.
Qantas will also launch a review of its structure to identify possible changes that could unlock capital.
It will also look at capital expenditure to try to generate positive cash flow by 2015.
The airline said trading conditions deteriorated markedly in November with a steeper decline in passenger loads and yields.
Mr Joyce said the airline had faced tough conditions since the global financial crisis and was competing on the international stage against airlines subsidised by foreign governments.
“The Australian international market is the toughest anywhere in the world,’ he said.
“Our competitors in the international market, almost all owned or generously supported by their governments, have increased capacity to pursue Australian dollar profits, changing the shape of the market permanently.”
He also hit out again at rival Virgin Australia and its major shareholders: Air New Zealand, Singapore Airlines and Etihad.
Qantas has repeatedly criticised Virgin’s planned $350 million equity raising, which will see the three foreign airlines increase their ownership stake.
“There has been an unprecedented distortion of the Australian domestic market, with Virgin Australia’s strategy to seek majority ownership and massive financial backing from foreign government owned airlines,” he said.
“The uneven playing field in Australian aviation is being tilted further.”
Mr Joyce said Qantas was continuing to talk to the Abbott government about possible federal support for the airline.
The possibility of the government taking a stake in Qantas, or lifting the cap on the airline’s foreign ownership cap have been raised publicly in recent weeks.
“Political leaders recognise Qantas’ strategic importance, its critical role in providing essential air services, and the benefits to Australia of a strong and viable national carrier,” Mr Joyce said.