Australian airline has announced full year profits will be up to 80 per cent lower than initially forecast, with hundreds of jobs due to be lost as a result.
Qantas had predicted a profit of 500 million Australian dollars (£245 million) but now concedes the real figure will be somewhere between A$100 million and A$200 million.
500 management positions will be axed and 1,250 other jobs are under threat.
Chief executive Alan Joyce said: "Market conditions have deteriorated, especially in our international business. We are experiencing significantly lower demand, particularly in premium classes, and considerable price pressures with extensive sales and discounting by all carriers - in some cases leading to fare reductions of up to 50 per cent.
"We have no choice but to lower our profit forecast and make major changes to ensure Qantas can weather the current commercial environment.
"Unfortunately, responding rapidly to declining economic conditions is going to have a direct impact on our staff.
"It's very concerning because of the impact on people's jobs potentially, so we'll do everything and anything to make sure people aren't made compulsorily redundant," he added.
Last summer Qantas announced 1,500 job losses, followed by another 90 just last month.