Jet fuel costs hit Qantas profits

Qantas expects its fuel bill to increase by A$1.1bn in the coming year

Australia's biggest airline Qantas has seen its annual profits drop by more than 30% after spiralling fuel bills cancelled out record passenger numbers.

Redundancy costs also hit the bottom line, with the firm saying it planned to shed 1,000 more management and support staff.

The national flag carrier said full-year net profits were 479.5m Australian dollars ($367.7m; £193.7m).

Fuel now made up 30% of its costs, up from 17% two years ago, it said.

Qantas' fuel bill was A$2.8bn in the year to the end of June and was expected to be A$3.9bn in this financial year, chief executive Geoff Dixon said.

He added that security costs would remain a challenge - especially in the light of the alleged terror plot disrupted in the UK last week.

Challenges

More passengers than ever before had been carried and revenues hit a company record of A$13.65bn - up from A$12.56bn the previous year.

Qantas is building its budget offshoot Jetstar to fly in Asia - and has ordered 65 Boeing 787 jets for the expansion.

Domestically both Qantas and Jetstar face challenges from budget carrier Virgin Blue.