QF profit hit by fuel costs

QANTAS CEO Alan Joyce insists the airline’s strategy to boost its international group is working, despite the division’s underlying earnings declining 28% to $285m last year.

The company today unveiled a $1.3 billion underlying profit before tax, down 17% (TD breaking news) with Joyce confirming fuel costs were up $614 million, along with a further $154 million foreign exchange impact on the overall result.

Joyce said the figures were “particularly positive given mixed market conditions,” saying despite the headwinds “we remain one of the best performing airline groups in the world”.

Qantas Loyalty achieved a record underlying EBIT of $374 million, up 8%, driven by the core Frequent Flyer program and new insurance and financial products.

QF Group Domestic operations contributed $1.03 billion in underlying EBIT, with combined QF and JQ revenue growing 4% on flat capacity “as fares caught up to higher oil costs”.

The resources market continued to strengthen, and Qantas claimed an increased share of both the corporate and small business domestic markets.

International network and fleet changes continued to deliver benefits, with strong performances on Perth-London and Singapore hub services.

Off the back of the result, the carrier revealed it would reward 25,000 of its staff with a $1,250 travel bonus each.

Qantas said the reward represented a lot of value due to an internal discount rate and it was enough to take a family of four on Jetstar to Hawaii & back.

Joyce said the carrier felt confident about its outlook, with 100% of its fuel bill hedged.