Qantas completes turnaround with record A$1.53b annual profit

Qantas Airways reported a jump in annual profit and announced its first dividend since 2009.
Qantas Airways reported a jump in annual profit and announced its first dividend since 2009.PHOTO: ST FILE

SYDNEY (BLOOMBERG) - Qantas Airways announced its first dividend since 2009 and handed bonuses to 25,000 workers as chief executive officer Alan Joyce's turnaround programme delivered a record annual profit.

The nation's biggest carrier will pay a final dividend of 7 Australian cents a share and buy back as much as A$366 million (S$376.8 million) of stock, according to a filing on Wednesday (Aug 24). Earnings before tax and one-time items surged 57 per cent to A$1.53 billion in the 12 months ended June 30.

Singapore Airlines and Cathay Pacific Airways have already restarted paying dividends after the global financial crisis.

Mr Joyce, who has cut thousands of jobs, deferred aircraft orders and dropped unprofitable routes as part of a A$2 billion transformation programme, said the three-year plan is now on course to exceed its target. The regular dividend has returned earlier than some analysts had expected.

"Qantas is in a really sweet spot,'' said Angus Nicholson, a market analyst at IG Ltd. "A regular dividend in this global environment is going to be a real positive. It shows you how consistently the company can hold these gains going forward."

The airline's shares rose 4.1 per cent to A$3.54 at 10:10 am in Sydney. Qantas stock has almost tripled since Mr Joyce announced his turnaround programme on Feb. 27, 2014.  Before today, Sydney-based Qantas had made two one-off capital returns totaling more than A$1 billion in the past year.

Future surplus capital will be distributed first to shareholders in the form of a dividend, combined with share buybacks and one-off payments, Qantas said on Wednesday.

"We do see the strong performance of the company continuing,'' Mr Joyce said on a call with reporters. "Thanks to our transformation programme, we're making money."

The cash bonus for workers, including pilots, cabin crew and ground staff, will total A$75 million.

Underlying operating profit at Qantas's domestic business rose 20 per cent to A$578 million, and soared 92 per cent to A$512 million at its international unit. The measure at the Qantas loyalty frequent-flier unit rose 10 per cent A$346 million and almost doubled to A$452 million at budget carrier Jetstar.

Rather than throw capital on its own international routes, Mr Joyce has favored alliances with Emirates, China Eastern Airlines and American Airlines to generate profitable revenue. The weaker Australian dollar has also drawn more overseas visitors to Australia.

Group net income jumped 84 per cent to A$1.03 billion in the year to June. The transformation program has now wrung out A$1.66 billion in benefits - a figure that is now expected to reach A$2.1 billion by June 2017 - Mr Joyce said on Wednesday.

Qantas this financial year is due to receive the first of eight fuel-efficient Boeing Co. Dreamliners, after deferring its eight remaining A380 Airbus superjumbos. Mr Joyce is considering deploying the Dreamliner on a direct Perth-to-London route that would rank among the world's longest flights. On Australia's eastern seaboard, other possible routes for the aircraft include Brisbane to the US, Melbourne to Dallas or Sydney to Chicago.