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Iraq, virus prompt Qantas cuts
SYDNEY, Australia (CNN) -- Australian carrier Qantas Airways will cut international flights by up to 20 percent over the next four months, citing the impact of the war in Iraq and the pneumonia-type disease that is sweeping across Asia. It said Friday the cuts would affect its services between Australia and Asia, Europe and the United States, starting next Tuesday, April 1. The announcement sent its shares tumbling on the Australian Stock Exchange. After dropping 4 percent Thursday on reports of the planned cutbacks, Qantas shares are trading a further 12 percent lower Friday morning at A$2.92, an 18-month low. The airline joins other global carriers that are cutting services and staff because of declining passenger numbers stemming from the war in Iraq and the Severe Acute Respiratory Syndrome (SARS) disease that has already caused at least 50 deaths around the world, including 11 in Hong Kong and 34 in China. British Airways, Japan Airlines, Singapore Airlines, Cathay Pacific, Air France, Lufthansa and the main U.S. international carriers are among those that have already announced cuts. According to the International Air Transport Association, the war in Iraq could add $10 billion to world airline losses this year. It has also predicted international passenger numbers will drop 15 to 20 percent during the year, depending on the region. (Full story) Qantas Chief Executive Geoff Dixon said Friday that the airline, one of the most profitable in the Asia Pacific, also now would not meet market expectations for its full-year profit. Last month, Qantas reported a better than expected first-half profit of Aust. $352.5 million ($208 million) and said it was on track to meet its full year target. But it also warned then that a war in Iraq could affect its earnings, and announced measures to reduce staff numbers by 2500 full-time positions by the end of June. Qantas ranks among the top 10 airlines globally and dominates the Australian domestic market, where its only real competitor is discount operator Virgin Blue. While it and other airlines have previously warned about the Iraq impact, they did not count on the mystery SARS virus which has further spooked already nervous travellers. Schools closedHong Kong and Singapore, two of the key travel hubs in Asia, have been hard-hit by fears about SARS and both centers have closed schools until April 6. (Full story) Around the world, about 1300 people in 14 countries have contracted the illness, according to the World Health Organization. The disease is thought to have originated in southern China's Guangdong province, adjoining Hong Kong. Hong Kong, which is an important destination for Qantas, is among its list of service cutbacks, with six of 30 weekly flights suspended. Dixon said that from next week, Qantas also would reduce its services to London, Rome, Paris, Los Angeles and Japan. It would defer its planned Chicago service and some other planned increases, and shift some of its international capacity to Australian domestic routes. But Dixon said the airline was well positioned to benefit from a recovery in the global travel market. "The company will still record a strong result for the year ended 30 June 2003 and will remain one of the most profitable airlines in the world," Dixon said.
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