On Wednesday two leading carriers in Australasia, Qantas and Air New Zealand shrunk their wings in the face of rising fuel prices, with Qantas cutting more seats.

Air New Zealand predicted a steep fall in its annual profits and said that it would replace its planes with more fuel-efficient aircrafts on some long-haul routes and keep on reviewing ticket prices, network of routes and costs.

In a statement, Qantas Chief Executive Geoff Dixon said, "We have to look harder at areas where we do have control".

Mr. Dixon added that the carrier was carrying out many new cost-cutting measures, including a 5 per cent reduction in its capacity, equivalent to grounding 6 aircrafts.

He said, "Despite our fuel-hedging strategy, fuel surcharges, two separate across-the-board fare increases and a recruitment freeze, we are not bridging the widening gap between the actual increase in the cost of fuel and the amount we offset".

The price of crude oil have increased almost 40 per cent this year to a record high level of $130 a barrel, sending airline companies' profits and shares into a tailspin-Qantas shares have seen a 36 per cent of fall this year while shares of Air New Zealand have dropped by 41 per cent.

It was only during last week when Qantas hiked its fares for the second time in less than a month's period, but the attempt did not prevent credit-rating agency Standard & Poor's from indicating on Wednesday a possible lowering of the rating of the carrier with a negative position.