Qantas posts record profit on cost cuts
sydney — Australia’s Qantas Airways said half-year profit jumped to a record on cost cuts and hikes in domestic fares — which combined with a share buyback sent its stock bounding higher.
The results are the latest in a slew of robust earnings for the aviation sector and Qantas CEO Alan Joyce was upbeat about future earnings prospects, noting that Australia’s all-important resources sector was growing for the first time in 3 years.
“We’ve a lot of work to do to maintain it, but if we deliver on that work, I have no doubt that the company can keep on maintaining this kind of performance,” he told a news conference.
It also outlined plans for its own pilot academy to address a severe pilot shortage globally. The academy will start next year and aims to train 500 pilots a year when fully established.
The ‘Flying Kangaroo’, which controls nearly two-thirds of Australia’s domestic market, has pushed average domestic ticket prices to their highest levels in almost a decade while trimming capacity.
At the same time, demand has gathered pace. In addition to the pick-up in the resources sector, Joyce said growth in the financial services, construction and infrastructure sectors were driving business travel demand. Leisure demand was also strong, with international tourist numbers at record highs.
Underlying profit before tax, its most closely watched measure, surged 15 per cent to A$976 million ($760 million) for the 6 months ending December 31, its best result for a first-half and around 3 per cent higher than the top of its own guidance. Domestic revenue jumped by a fifth.
Investors also cheered a A$378 million buyback, sending its shares up as much as 10 per cent, their biggest daily gain in 3 years. They last traded 6 per cent higher.
“Capacity and capital discipline at a time where demand growth remains robust is driving the stock and its outlook,” said Sondal Bensan, an analyst at Qantas’ biggest shareholder, BT Investment Management wrote in an email.
“Next leg will be in the international business that has been held back the past 2 years,” he said.
Other airlines and aviation firms are also basking in better times for the industry.
Qantas also confirmed the purchase of 18 long-range Airbus A331LRneo aircraft for budget arm Jetstar. — Reuters