Qantas soars to record annual profit of $1.1B
Australian carrier Qantas Wednesday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive restructuring.
SYDNEY — Australian carrier Qantas Wednesday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive restructuring.
Qantas’s results were also boosted by the sharp fall in global oil prices and a less competitive domestic market that has given the firm a stable base of earnings.
In contrast, other international airlines such as Cathay Pacific, ANA and Japan Airlines have seen profits plunge amid intense competition from lower-cost rivals and as terrorism fears eat into demand.
Qantas reported a net annual profit of A$1.42 billion ($1.08 billion) in the year to June 30, an 80% increase from the previous corresponding period.
Underlying profit before tax — Qantas’s preferred measure — jumped by 57% to also hit a record of A$1.53 billion.
The company resumed paying dividends of seven cents per share, the first payout since 2009 and announced a share buyback of up to A$366 billion. Qantas also said it would give a A$3,000 oneoff bonus to some 25,000 staff who had signed up to a pay freeze.
“These are fantastic results that we’ve had in the last year, as I said, record results for the group,” Chief Executive Alan Joyce told reporters in Sydney.
“We do see the strong performance of the company continuing. This business has taken a lot of cost out and improved revenue dramatically. The transformation program has changed the business completely, delivering over A$ 1.66 billion in performance improvements. Without that, we wouldn’t be where we are today.”
Qantas shares rose 2.50% to A$3.48 in midday Sydney trade on Wednesday.
ADVANTAGE OVER GLOBAL PEERS
The aggressive push to cut some A$2 billion in costs and restructure the airline over three years kicked off in early 2014, with thousands of jobs axed and dozens of aircraft sold or orders deferred.
Qantas said it has since hit A$1.66 billion in cost and revenue savings — including A$557 million in the financial year ending June 2016. The carrier added that it expected to reach A$2.1 billion in cost and revenue savings by June next year.
“One of the reasons why Qantas is looking quite compelling and is producing very good results of late is the fact that the domestic market here has now basically shrunk to mostly a duopoly between them and Virgin,” IG Markets’ analyst Angus Nicholson told AFP.
“Many other airlines are faced with sharp competition on many of their different major routes, which crimps potential earnings and crimps margin growth.”
Qantas’ domestic business reported record underlying earnings of A$ 578 million, a 20% increase from the prior year, while its international division posted a 92% jump in underlying earnings to a record A$512 million.
The airline’s discount carrier Jetstar likewise reached record profits, with a 97% leap in underlying earnings to A$452 million.
“Qantas now has this quite comfortable steady cash flow coming from the domestic market that can really finance their ventures into the more competitive international routes and that’s probably its major advantage against many other airlines,” Nicholson added.
Joyce said Qantas was set to roll out Wi-Fi access for passengers on its regional and international fleets, and would start selling tickets for its Dreamliner flights before the end of this year, with routes for the incoming Boeing jet commencing in 2017. —