Qantas earns record profit, shares jump

Australian carrier says annual profit to be driven by domestic, international business

Qantas Airways Ltd said it expects to report record annual profit on strengthening global demand as well as hikes in domestic fares and cuts to capacity, sending its shares up almost 7 per cent to their loftiest since November.

The promising outlook indicates Qantas’ international division is on the path to growth after years of sluggishness.

Results for the so-called “Flying Kangaroo”, which controls nearly two-thirds of Australia’s domestic market, have been mainly propped up by its business at home.

“We’re seeing solid results from each of our business units, which is a reflection of broadly positive trading conditions and the work we’ve done to strengthen the group,” Chief Executive Officer Alan Joyce said in a statement yesterday.

Qantas projected pre-tax profit of between A$1.55 billion (Dh4.2 billion) and A$1.60 billion for the year to end-June, versus A$1.4 billion a year ago. Pre-tax profit is the most closely watched measure of airline performance.

Following the airline’s annual projections, analysts bumped up their forecasts to reflect the range given by Qantas, from an earlier average of A$1.55 billion, Thomson Reuters data shows.

“International has been doing it tough for a while but competitor capacity growth is abating,” Sonadal Bensan, an analyst at Qantas’ biggest shareholder, BT Investment Management, said in an email.

“This will result in international earnings rising from here. In light of cost headwinds, that will be a great outcome.” Carriers around the world have been experiencing weak sales for international flights because of competition and sluggish demand.