Page last updated at 14:40 GMT, Wednesday, 28 May 2008 15:40 UK

Fuel price grounds Qantas planes

Qantas plane
A number of older Qantas planes will be retired as part of the cuts.

The rising cost of fuel has caused Australian airline Qantas to ground a number of aircraft and cancel the purchase of a new plane.

Staff numbers will be reduced and a number of domestic routes will also be cancelled in the coming months.

The airline estimated its fuel bill would make up 35% of the company's total expenditure this year.

Qantas will announce changes to its international network within the next week, the company said.

"We must make these hard decisions now if we are to ensure the ongoing strength of Qantas, said chief executive Geoff Dixon.

"It is inevitable that a reduction in staff numbers will be necessary in selected parts of our business," he said.

The changes announced so far are the equivalent of grounding six aircraft, the company said.

But despite cancelling the order for one Jetstar A321 plane, it reinforced a commitment to invest 35bn Australian dollars ($33.6bn; 17bn) in new aircraft.

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