Qantas (ASX:QAN) has cut its planned expenditure and aircraft capacity in response to sluggish growth in the domestic market.
In a market update, Qantas said it had cut its target for domestic capacity growth for FY12 to 5.5%, compared to the planned 8%.
The company will accordingly reduce capex for the second half by $100 million, and for FY12 by $300 million.
Qantas will also shave to 34 the number of aircraft it expects to lease or buy in FY12, compared to the 43 previously planned. Orders for 12 narrow-body jets will also be cancelled or deferred.
This will result in a reduction in aircraft lease commitments for FY12 of $300 million.
CEO Alan Joyce said the measures were a routine response to domestic conditions. “The Qantas group has always taken decisive action to match capacity to demand,” he said.
Financing is already in place for the remaining planed orders for FY12, and the company plans to the balance of its commitments from its $3 billion in cash reserves and available debt, he added.
QAN shares fell 1.59% in Wednesday's trading to $1.855.