An Australian airline price war and regional economic slowdown has led Qantas and the Air New Zealand Group to lower profit forecasts.

ANZ chairman Sir Selwyn Cushing says he does "not see any relief" from the prevailing conditions during the balance of the year and expects "to report a substantial operating loss for the full year".

Qantas chief executive Geoff Dixon is pessimistic: "The competition we face will place pressure on results," he says. Start-up Impulse Airlines admits that it could make a loss and Virgin Blue is reviewing its 737 fleet size.

Source: Flight International