Qantas Airways will cut capacity and drop management positions as part of a plan to slash costs in the wake of rising fuel prices and several natural disasters.

The Oneworld carrier will slash domestic capacity growth in the second half of 2011 to 8% from 14%, and likewise for international capacity growth to 7% from 10%.

It will suspend up to four return weekly Jetstar services from Australia to Japan from 1 April to end-August, suspend Qantas services between Perth and Tokyo Narita from 8 May, and downsize the aircraft operated on the Sydney-Tokyo Narita route to Airbus A330s from Boeing 747s,

Qantas will also reduce its Jetstar domestic New Zealand services to Christchurch and its Melbourne-Christchurch daily service from April.

The carrier will retire two Boeing 767 aircraft early, it adds.

On top of the capacity reductions, the airline will cut management headcount.

"We want to limit redundancies wherever possible and will be using a range of initiatives to manage the reduction in capacity including annual and long service leave. At this stage only management positions will be made redundant," says Qantas CEO Alan Joyce.

Joyce adds that the rising price of fuel is "the most serious challenge Qantas has faced since the global financial crisis".

Last November's Airbus A380 uncontained engine failure and recent natural disasters are also expected to hit the airline's financial results in its second fiscal half-year ending 30 June.

The engine failure and subsequent grounding of its A380 fleet will cost the airline A$80 million ($80 million) and losses from disasters such as the floods in Queensland and the Christchurch earthquake are expected to top A$140 million.

Source: Air Transport Intelligence news