Qantas posts record H1 profit, announces stock buyback

Qantas CEO Alan Joyce (right in photo) chatting with pilots after announcing the airlines' first-half net profit of 234 per cent at a media briefing in Sydney, Australia, yesterday.
Qantas CEO Alan Joyce (right in photo) chatting with pilots after announcing the airlines' first-half net profit of 234 per cent at a media briefing in Sydney, Australia, yesterday.PHOTO: EUROPEAN PRESSPHOTO AGENCY

SYDNEY • Australian carrier Qantas said first-half net profit soared 234 per cent on the back of belt-tightening and lower oil prices, as it announced a A$500 million (S$509 million) stock buyback to share the spoils with investors.

The A$688 million net profit comes on the heels of a ruthless cost-cutting drive that has seen thousands of jobs axed and aircraft deliveries deferred in recent years to stem mounting losses.

Underlying profit before tax in the six months to Dec 31 - the airline's preferred measure of financial performance - was A$921 million, at the upper end of analyst expectations, while revenue rose 5 per cent. The result was boosted by A$448 million in savings through the airline hedging on lower fuel prices.

"This record result reflects a stronger, leaner, more agile Qantas," said chief executive officer Alan Joyce, who declared his intention to stay with the airline indefinitely.

"Without a focus on revenue, costs and balance sheet strength, today's result would not have been possible.

"Both globally and domestically, the aviation industry is intensely competitive. That's why it's so important that we maintain our cost discipline, invest to grow revenue, and continue innovating with new ventures and technology."

The bottom line was boosted by strong performances across almost all of the airline's divisions, with both domestic and international operations in profit.

Freight was the only significant business to go backwards, down 30 per cent to A$38 million.

Domestic earnings improved to A$387 million, up A$160 million from the previous corresponding period, while the once-struggling international arm was A$270 million in the black, helped by a lower Australian dollar fuel price and more capacity to Asia and the United States.

The company's low-fare Jetstar operation also did well, driven by a strong performance in the domestic Australian market.

Jetstar Japan, Jetstar Asia in Singapore, and Jetstar Pacific in Vietnam were collectively profitable in the first half, compared to the previous year, although Indonesian volcano eruptions had a A$23 million adverse impact.

The turnaround further vindicates Mr Joyce's strategy two years ago of adopting a more conservative financial framework with an ongoing plan to slash A$2 billion in costs by the end of 2016/17. Savings of A$1.35 billion have been realised so far.

"The strength of our performance and balance sheet means we can continue to reward our shareholders for their confidence in our business," Mr Joyce said.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on February 24, 2016, with the headline 'Qantas posts record H1 profit, announces stock buyback'. Print Edition | Subscribe