Embattled Australian flag carrier Qantas will cut at least 1,000 jobs over the next 12 months as it struggles to keep afloat financially amid weak trading conditions and return on fares.

Ahead of the workforce reduction, Qantas warned it is expected to report a loss of $300 million in the first half, causing its shares to plummet 16 per cent to $1.02. It is six cents shy of the all-time low of 96 cents in 2012.

Axing jobs is part of the cost reduction strategy that Qantas will implement over the next three years to reduce spending by at least $2 billion.

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Reports said that Qantas is also considering selling parts of its business, and speculations are that it would hit the frequent flyer programme.

Besides the anticipated loss of $300 million for the 1st half, which is usually the airline's strongest, Qantas also said that return on fares would likely go down to 3.5 per cent for the same period.

Qantas Chief Executive Alan Joyce, said in a statement, "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 blamed the air carrier's woes on the unprecedented distortion of the Australian domestic market caused by rival Virgin Australia's raising $350 million capital from foreign sources, particularly government-owned air carriers.

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