Qantas/Domestic: "Line In The Sand" Has Appeared

[Wirraway]

Dow Jones
Thursday August 21, 11:16 AM AEST

Qantas/Domestic: "Line In The Sand" Has Appeared

SYDNEY (Dow Jones)--Qantas Airways Ltd. (A.QAN) said Thursday it will protect its domestic market share of about 65% to 70%.

Chief executive Geoff Dixon confirmed at a media briefing that the "line in the sand" was very near as Virgin Blue increases its competitive position.

"We are very close to it," he said, adding "give or take two to three percentage points".

"We believe anything between 65% and 70% is what Qantas must defend, and we are going to defend it," Dixon said.

He also said the company must improve profitability from its domestic operations, which contributed A$165.7 million to earnings before interest and tax in the year ended June 30, 2003. This contribution fell from A$298.2 million, with the company citing increased competition as one factor.

Pretax earnings from international operations rose to A$221.6 million from A$202.8 million a year earlier.

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SYDNEY (Dow Jones)--Qantas Airways Ltd. chief executive Geoff Dixon said Thursday that the Australian flag carrier is well advanced with plans to launch its own low-cost domestic operation.

Dixon said the company's board considered the proposal this week, with some further discussions needed before a final decision is made.

Qantas has about 70% of the domestic market, but in recent years has seen its market share attacked by no-frills carrier Virgin Blue, a joint venture between Richard Branson's Virgin Group and Australian transport company Patrick Corp.

Dixon said the Qantas operation will have separate management and be conducted on a standalone basis.

"We are not in the business of starting airlines unless we can make money," he told reporters.

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