Qantas posts record profit, to pay first dividends in 7 years

SYDNEY • Australian carrier Qantas yesterday posted record annual profits and announced its first payout to shareholders in seven years, staging a turnaround after axing jobs and selling aircraft in an aggressive restructuring.

Qantas' results were also boosted by the sharp fall in global oil prices and a less competitive domestic market that has given the firm a stable base of earnings.

In contrast, other international airlines such as Cathay Pacific, ANA and Japan Airlines have seen profits plunge amid intense competition from lower-cost rivals and as terrorism fears eat into demand.

Qantas reported a net annual profit of A$1.42 billion (S$1.46 billion) in the year to June 30, an 80 per cent increase from the previous corresponding period.

Underlying profit before tax jumped by 57 per cent to also hit a record of A$1.53 billion.

The company resumed paying dividends of seven Australian cents per share, the first payout since 2009 and announced a share buyback of up to A$366 million. Qantas also said it would give a A$3,000 one-off bonus to some 25,000 staff who had signed up to a pay freeze.

"These are fantastic results that we've had in the last year, as I said, record results for the group," chief executive Alan Joyce said.

"We do see the strong performance of the company continuing. This business has taken a lot of cost out and improved revenue dramatically. The transformation programme has changed the business completely, delivering over A$1.66 billion in performance improvements. Without that, we wouldn't be where we are today."

Qantas shares rose 2.50 per cent to A$3.48 at midday yesterday.

The aggressive push to cut some A$2 billion in costs and restructure the airline over three years kicked off in early 2014, with thousands of jobs axed and dozens of aircraft sold or orders deferred.

Qantas said it has since hit A$1.66 billion in cost and revenue savings. The carrier added that it expected to reach A$2.1 billion in cost and revenue savings by June next year.

"One of the reasons why Qantas is looking quite compelling and is producing very good results of late is the fact that the domestic market here has now basically shrunk to mostly a duopoly between them and Virgin," IG Markets' analyst Angus Nicholson said.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on August 25, 2016, with the headline 'Qantas posts record profit, to pay first dividends in 7 years'. Print Edition | Subscribe