Australia's Qantas Airways warned on Tuesday that it expects a huge slide in its annual profits, up to 90 percent, due to heavy losses in its international operations along with high fuel costs.
The company expects its underlying profit before tax for the year 2011/12 somewhere between A$50mn ($48.6mn, £31.6mn) and A$100mn. The new figures were alarmingly low as compared with the A$552 million a year ago and was far below the analysts' expectation of A$285 mn on average.
According to the airline, the fuel costs for the period are expected to increase by A$700m to A$4.4bn, a sharp rise compared to the same period previous year.
Qantas shares tumbled to a record low, an 18.3 percent slide at the Australian Securities Exchange following the warning announcement.
The company attributed the causes of the huge loss to weak travel demand triggered by the eurozone crisis along with the soaring fuel cost.
The company expects the losses at its international operations to be over A$450mn in the year ending 30 June.
"The forecast result reflects the recent deterioration in global aviation operating conditions driven by the European economic crisis, the Group's highest ever jet fuel bill, and substantial capacity increases in the domestic market that have reduced yields," read a statement from Qantas.
Qantas has already announced its plans to separate its domestic and international operations. Other plans to streamline the operations include halting operations in its loss-making routes and job cuts.
"We are attacking costs and allocating aircraft and capital efficiently. Over A$300 million in annual benefits have been identified from the changes we are making," Reuters quoted Alan Joyce, chief executive of Qantas, as saying.
The European economic crisis and the soaring fuel prices are already taking a toll on the global aviation sector.
The sector would be experiencing a net loss, according to the International Air Transport Association and it cut airline profits in 2012 to $3bn from $3.5bn.