Qantas Airways is to shed 1,000 jobs over the next year and its boss will take a pay cut as the flagship Australian carrier forecasts a half-year loss of at least £138 million.
Lower demand, a strong Australian dollar and steep fuel costs have put pressure on the airline and Qantas said conditions were expected to remain volatile next year.
The airline expects to post pre-tax losses of between 250 million (£138m) and 300 million dollars (£165.5m) for the six months to December 31.
Qantas is trying to save two billion dollars (£1bn) over the next three years. On top of the job cuts, it will freeze pay for all employees and cut the salaries of chief executive Alan Joyce and other bosses.
"The challenges we now face are immense, but we will overcome them," Mr Joyce said. "The Australian international market is the toughest anywhere in the world."
The news sent Qantas stock plummeting, with the price dropping as much as 17%.
A range of measures to help the airline have been considered. Last month, Australia's treasurer Joe Hockey suggested the government may need to change rules that currently limit foreign ownership in the airline to 49%.
Earlier this year Qantas attempted to boost its struggling international division by signing a 10-year partnership with Dubai-based rival Emirates.