Qantas swoops back into the black

Qantas CEO Alan Joyce labelled the airline's change in fortunes as "the biggest and fastest transformation" in its history.
Qantas CEO Alan Joyce labelled the airline's change in fortunes as "the biggest and fastest transformation" in its history.PHOTO: AGENCE FRANCE-PRESSE

Airline makes $1b in profit before tax after being in the red a year ago

SYDNEY • Qantas Airways posted one of the quickest turnarounds in Australian corporate history yesterday with a return to full-year profit, and announced it will exercise options to buy eight Boeing 787-9 Dreamliner jets.

The Australian flag carrier also said it would return some funds to shareholders after a tough cost-cutting programme and tailwinds from cheaper fuel costs saw profit rebounding. Qantas reported underlying profit before tax, the most closely watched measure, of A$975 million (S$1 billion) for the 12 months to June 30.

That was slightly under analyst consensus for a A$982 million profit, but it was a sizeable and swift turnaround from the A$646 million underlying loss the so-called Flying Kangaroo reported just a year ago. It also brings Qantas close to the psychologically important A$1 billion mark last reached in 2008.

"We are halfway through the biggest and fastest transformation in our history," chief executive Alan Joyce said in a statement.

"Without that transformation, we would not be reporting this strong profit, recommencing shareholder returns, or announcing our ultra-efficient Dreamliner fleet for Qantas International," he added.

Revenue rose just 3 per cent to A$15.82 billion, underscoring the success of Mr Joyce's aggressive cost-cutting that included cutting thousands of jobs, trimming capacity and overhauling frequent flier programmes.

Qantas' international division was profitable for the first time since the global financial crisis, with earnings before interest and tax of A$764 million.

The airline also benefited from a A$597 million drop in fuel costs from the previous year.

Qantas' share price has soared 200 per cent over the past year, making it the fourth-best performing airline stock among 47 large and midcap airline companies, according to Thomson Reuters data.

Qantas had postponed plans to refresh its ageing fleet of 11 Boeing 747s used on long-haul flights with the more fuel-efficient Boeing 787-9 aircraft when it was in financial difficulty.

The purchases announced yesterday will come online in 2017 and could open up new routes for the airline, like Sydney to Vancouver, and Melbourne to Dallas.

REUTERS

A version of this article appeared in the print edition of The Straits Times on August 21, 2015, with the headline 'Qantas swoops back into the black'. Print Edition | Subscribe