Qantas: Profits up, shares in a tailspin

Earlier, Qantas reported a record net profit for the first half of the year of Aus$352.5m (�131m; $207.9m), up 129% on the previous year, after a strong rebound in passenger numbers.

But the carrier warned a war could cut passenger numbers by up to 20%, adding they were already down on key routes from Europe and Japan to Australia.

"If things stay as they are, taking into account the drop-off we've seen in forward bookings over the next 16 weeks, we're still on track to meet the profit forecast," said chief executive Geoff Dixon.

"But, if they deteriorate further, things will change."

Union demands

The results confirmed Qantas' position as one of the world's most profitable airlines.

The airline said it would cut flights starting in March, and cut costs by forcing staff to take leave.

Unions said the record profit - and the hefty salaries of top executives - meant the carrier could afford pay rises being demanded by cabin crews.

"Management is swilling champagne at first class while cabin crew are looking for a seat in economy, and they've just relegated us to cargo," Flight Attendants' Association spokesman Troy Warner said.

Cabin crews plan to strike next Tuesday which will disrupt about 30 international flights from Sydney.

On schedule

Qantas said domestic market share had fallen to about 70% in the half year, due to competition from Virgin Blue.

It still expected to buy a 22.5% stake in Air New Zealand, but warned it would reconsider if there were too many regulatory issues.

The Australian Competition and Consumer Commission is investigating the deal.

Qantas - which is 17% owned by British Airways - saw its shares fall by Aus$0.46 to Aus$3.34, their lowest level since just after the September 11 attacks on the US.