” (Qantas Airways Limited and Controlled Entities – Preliminary Final Report, 2008)
In July, 2008 Qantas reported that it intends to “eliminate 1,500 jobs world-wide and it shed plans to increase flying capacity as it continues to battle high jet-fuel costs.” (the Wall Street Journal, 2008) in addition, the plans to hire 1,200 people have been canceled. Qantas will also be retiring 22 aircraft from its fleet and call centers in Arizona and London will be closed as well. (Thurlow and McFarland, 2008)
SUMMARY & CONCLUSION
Quantas Airways, Ltd. is the number one domestic airline industry in Australia and is a leader in the Asia-Pacific region. In fact, Quantas is among the ten largest airlines in the world and connects Australia in approximately 81 destinations and forty countries throughout the world. The company operates several regional airlines in the country of Australia and carries in excess of thirty million passengers each year. When compared to industry peers Qantas is ahead of the others excepting British Airways both in terms of company revenues and net income.
Qantas is stated to be subject to “foreign currency, interest rate, fuel price and credit risks.” (Qantas Airways Limited and Controlled Entities – Preliminary Final Report, 2008) This risks are hedged through derivative financial instruments. The policy of Qantas is “not to enter into, issue or hold derivative financial instruments for speculative trading purposes.” (Qantas Airways Limited and Controlled Entities – Preliminary Final Report, 2008) it is related that the Accounting Standard AASB 139: Financial Instruments: Recognition and Measurement contains a “strict definition of hedge effectiveness for accounting purposes” and makes a requirement that “all derivatives be held at current market values. Each derivative transaction used to hedge identified risks must be documented and proven to be effective in offsetting changes in the value of the underlying risk within a range of 80% to 125%. This measure of effectiveness may result in economically appropriate hedging transactions being deemed ineffective for accounting purposes.” (Qantas Airways Limited and Controlled Entities – Preliminary Final Report,.