" (the Wall Street Journal, 2008) in addition, the plans to hire 1,200 people have been canceled. Qantas will also be retiring 22 aircraft from its fleet and call centers in Arizona and London will be closed as well. (Thurlow and McFarland, 2008) SUMMARY & CONCLUSION

Quantas Airways, Ltd. is the number one domestic airline industry in Australia and is a leader in the Asia-Pacific region. In fact, Quantas is among the ten largest airlines in the world and connects Australia in approximately 81 destinations and forty countries throughout the world. The company operates several regional airlines in the country of Australia and carries in excess of thirty million passengers each year. When compared to industry peers Qantas is ahead of the others excepting British Airways both in terms of company revenues and net income. Qantas is stated to be subject to "foreign currency, interest rate, fuel price and credit risks." (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008) This risks are hedged through derivative financial instruments. The policy of Qantas is "not...

Each derivative transaction used to hedge identified risks must be documented and proven to be effective in offsetting changes in the value of the underlying risk within a range of 80% to 125%. This measure of effectiveness may result in economically appropriate hedging transactions being deemed ineffective for accounting purposes." (Qantas Airways Limited and Controlled Entities - Preliminary Final Report, 2008) Qantas recognized a loss of $12.3 million as 'ineffective derivatives - open positions'. This amount is stated to have been excluded from the operating result "as it relates to derivative hedging instruments deemed ineffective for accounting purposes that are…