Article from: Dow Jones Newswires
Under pressure: Qantas chief executive Alan Joyce. Picture: AFP
Australia’s largest airline by revenue and passengers carried couldn't say if it expected to remain profitable this financial year given global economic conditions.
But the carrier plans to cut costs by $1.5 billion over the next three years, starting with a target of $500 million this financial year.
Net profit for the year to June 30 plunged to $117 million from $969m a year earlier, missing market forecasts centred on $131.5m.
A breakdown of the results showed Qantas recorded a loss in its second half, in line with International Air Transport Association forecasts of global industry losses in 2009.
To read Steve Creedy's analysis, click on Profit crash beats a loss at Qantas
As it juggled capacity in the volatile environment and in a further knock to Boeing's 787 program, Qantas also said it would lease four extra Airbus A330 aircraft for six years for its discount carrier Jetstar because of the delay in delivery of the 787s.
Through its mainline, Jetstar and regional airline operations, Qantas controls roughly two thirds of Australia's domestic commercial aviation market, where it operates in a virtual duopoly alongside rival Virgin Blue.
Qantas also controls about 30 per cent of international passenger movements in Australia.
Profit before tax for the year fell 87 per cent to $181m from $1.41 billion, after Qantas said in April that it expected this measure to be between $100m and $200m.
Shares of Qantas rose as much as 6.5 per cent to $2.77 and by late morning were up 5.4 per cent at $2.74, outpacing a 1 per cent gain in the benchmark S&P/ASX 200 index.
Citi analyst Phil Campbell said Qantas had produced a "good result in a very difficult environment".
"The outlook is still uncertain but leading indicators such as domestic business confidence are exhibiting a V-shaped recovery," said Mr Campbell in a note to clients.
The broker rates the stock a buy.
After Qantas had first-half pre-tax earnings of $288m, the full-year result means that the airline posted a loss before tax for the second half of the year of $107m, its first loss since 2003 when it was combating the aviation slowdown from the Asian SARS epidemic.
"There has never been a more volatile and challenging time for the world's aviation industry," said chief executive Alan Joyce.
"Through unprecedented and significant shifts in operating conditions and demand we have remained financially strong."
The airline said that passenger volumes appeared to have improved and profitability yields have stabilised at the levels experienced in the second half of fiscal 2009.
But high levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and exchange rates meant it was not possible to provide any profit guidance for this year.
Mr Joyce told reporters that while passenger demand had started to improve, "we haven't seen any yield improvements as a consequence yet, and who knows how long that will take".
"We've seen a stabilisation (in yields),…we haven't seen it getting worse," he said.
The group's results were propped by record earnings from its Frequent Flyer loyalty scheme and Jetstar, which mr Joyce said would continue to grow.
From October, Jetstar will commence five daily flights between Sydney and Melbourne's Tullamarine airport, replacing some of its services to Avalon airport outside Melbourne, and will use the leased A330s from late 2010 across Australia, South East Asia and Asia Pacific.
Jetstar Asia, the Singapore-based airline 49 per cent-owned by Qantas, also said today it would increase capacity by 46 per cent this year, adding three more A320 aircraft to its fleet.
"B787 program delays means we have had to consider medium-term options to support new long haul market opportunities for Jetstar," Mr Joyce said.
In June, Qantas cancelled orders for 15 Boeing 787-9 aircraft and delayed by four years delivery of 15 smaller 787-8 aircraft. The airline remains one of the biggest customers for the new Dreamliner aircraft with 50 firm orders with the first 15 planes due to arrive from mid-2013.
Full-year group revenue fell 6.9 per cent to $14.55bn from an adjusted $15.63bn and the airline did not declare a final dividend after paying 17 cents a year ago.
Additional reporting: AAP
Under pressure: Qantas chief executive Alan Joyce. Picture: AFP
Australia’s largest airline by revenue and passengers carried couldn't say if it expected to remain profitable this financial year given global economic conditions.
But the carrier plans to cut costs by $1.5 billion over the next three years, starting with a target of $500 million this financial year.
Net profit for the year to June 30 plunged to $117 million from $969m a year earlier, missing market forecasts centred on $131.5m.
A breakdown of the results showed Qantas recorded a loss in its second half, in line with International Air Transport Association forecasts of global industry losses in 2009.
To read Steve Creedy's analysis, click on Profit crash beats a loss at Qantas
As it juggled capacity in the volatile environment and in a further knock to Boeing's 787 program, Qantas also said it would lease four extra Airbus A330 aircraft for six years for its discount carrier Jetstar because of the delay in delivery of the 787s.
Through its mainline, Jetstar and regional airline operations, Qantas controls roughly two thirds of Australia's domestic commercial aviation market, where it operates in a virtual duopoly alongside rival Virgin Blue.
Qantas also controls about 30 per cent of international passenger movements in Australia.
Profit before tax for the year fell 87 per cent to $181m from $1.41 billion, after Qantas said in April that it expected this measure to be between $100m and $200m.
Shares of Qantas rose as much as 6.5 per cent to $2.77 and by late morning were up 5.4 per cent at $2.74, outpacing a 1 per cent gain in the benchmark S&P/ASX 200 index.
Citi analyst Phil Campbell said Qantas had produced a "good result in a very difficult environment".
"The outlook is still uncertain but leading indicators such as domestic business confidence are exhibiting a V-shaped recovery," said Mr Campbell in a note to clients.
The broker rates the stock a buy.
After Qantas had first-half pre-tax earnings of $288m, the full-year result means that the airline posted a loss before tax for the second half of the year of $107m, its first loss since 2003 when it was combating the aviation slowdown from the Asian SARS epidemic.
"There has never been a more volatile and challenging time for the world's aviation industry," said chief executive Alan Joyce.
"Through unprecedented and significant shifts in operating conditions and demand we have remained financially strong."
The airline said that passenger volumes appeared to have improved and profitability yields have stabilised at the levels experienced in the second half of fiscal 2009.
But high levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and exchange rates meant it was not possible to provide any profit guidance for this year.
Mr Joyce told reporters that while passenger demand had started to improve, "we haven't seen any yield improvements as a consequence yet, and who knows how long that will take".
"We've seen a stabilisation (in yields),…we haven't seen it getting worse," he said.
The group's results were propped by record earnings from its Frequent Flyer loyalty scheme and Jetstar, which mr Joyce said would continue to grow.
From October, Jetstar will commence five daily flights between Sydney and Melbourne's Tullamarine airport, replacing some of its services to Avalon airport outside Melbourne, and will use the leased A330s from late 2010 across Australia, South East Asia and Asia Pacific.
Jetstar Asia, the Singapore-based airline 49 per cent-owned by Qantas, also said today it would increase capacity by 46 per cent this year, adding three more A320 aircraft to its fleet.
"B787 program delays means we have had to consider medium-term options to support new long haul market opportunities for Jetstar," Mr Joyce said.
In June, Qantas cancelled orders for 15 Boeing 787-9 aircraft and delayed by four years delivery of 15 smaller 787-8 aircraft. The airline remains one of the biggest customers for the new Dreamliner aircraft with 50 firm orders with the first 15 planes due to arrive from mid-2013.
Full-year group revenue fell 6.9 per cent to $14.55bn from an adjusted $15.63bn and the airline did not declare a final dividend after paying 17 cents a year ago.
Additional reporting: AAP
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