It said "all options are on the table" as part of a wide-ranging structural review. The airline would not name the most likely options but possible courses of action include sell-downs of its investments in Asia. They include Jetstar Asia in Singapore and Jetstar Japan. Credit ratings agency Moody's delivered a further blow to the beleaguered airline on Thursday night when it warned that it is considering downgrading its all-important investment grade credit rating to junk status. "We cannot and we will not stand still": Qantas chief Alan Joyce says the airline has no choice but to cut jobs. Credit:Getty Images Analysts also scrambled to slash their forecasts of full year earnings, with Merrill Lynch tipping a loss of up to $868 million. Qantas shares slumped 16 per cent to $1.02 - just shy of an all-time low of 96 cents reached last year following the earnings warning. Its shares closed at $1.07, down 11 per cent.

It will be the first time the airline has recorded a loss in the first half since it was privatised in the 1990s. After pleading over the last two weeks for financial assistance from the federal government, Qantas said in a profit warning on Thursday that the ''challenges we now face are immense''. The airline will step up cost savings over the next three years, stripping out $2 billion. The cutting of at least 1000 jobs over the next year will include 300 roles that Qantas announced last month would be axed following the closure of its heavy maintenance base at Avalon, near Geelong. Qantas said it now expects to report an underlying loss before tax of between $250 million and $300 million for the six months to December 31. The first half is typically the airline's strongest.

Australia's largest airline said it expected yields – or return on fares – across the group to be 3.5 per cent lower in the first half compared with the same period last year. The profit warning was triggered by a significant deterioration in yields and passenger loads on planes across its international and domestic networks in November. Qantas chief executive Alan Joyce said the circumstances demanded urgent action. ''The challenges we now face are immense – but we will overcome them and we will continue to build a stronger and better Qantas for Australia,'' he said in a statement. Renewing his attack on his arch rival, Mr Joyce also said there had been ''unprecedented distortion of the Australian domestic market with Virgin Australia's strategy to seek major ownership and massive financial backing from government-owned airlines''.

''We cannot and we will not stand still in these extraordinary circumstances.'' Qantas has been aggressively lobbying the government to provide financial assistance which could include a debt guarantee or the purchase of a small stake. Independent Senator Nick Xenophon called for Mr Joyce and the entire Qantas board to be sacked, saying that management had moved costs around the business in order to make the local operation appear as though it was performing worse than it actually was. Mr Joyce said the structural review was running separately to its ongoing talks with the government. He informed the Treasurer Joe Hockey and Transport Minister Warren Truss of the structural review and profit warning shortly after it informed the market this morning. He also defended his own position when asked about the significant fall in Qantas's share price since he began as chief executive five years ago.

"The board have been very supportive on this. The board understands the dynamics in the marketplace," Mr Joyce said. Loading "Qantas has an amazing management team."

