Qantas Expects to Meet Profit Goal Despite Oil Cost

Qantas Airways, Australia's biggest airline, said on Monday it was confident of meeting its 2007/08 target of at least 40 percent profit growth despite a surge in jet fuel prices.

It said it would raise domestic and international fares by 3.5 percent and 3 percent respectively to help combat rising fuel prices.

It also said it would suspend its share buyback, cut non-essential spending and impose a hiring freeze.

Two weeks ago Qantas's main domestic rival, Virgin Blue Holdings, more than halved its profit outlook for this year on high fuel costs and increaed competition.

For next year, Qantas said it had hedged 34 percent of its fuel needs at $90 a barrel for benchmark crude oil WTI, mostly for the first half of the 2008/09 fiscal year.

"But if high fuel prices persist beyond this point it would be of increasing concern," Qantas Chief Executive Geoff Dixon said in a statement.

Oil futures hit a record just short of $120 a barrel on Monday on supply fears and tensions between the United States and Iran.

Qantas shares rose 1.5 percent at last traded at A$3.43 on Monday.