Qantas' half-year profit soars to record high

Qantas chief executive officer Alan Joyce announcing the company's half-year financial results in Sydney yesterday. He was upbeat about future earnings prospects, noting that Australia's all-important resource sector was growing for the first time in
Qantas chief executive officer Alan Joyce announcing the company's half-year financial results in Sydney yesterday. He was upbeat about future earnings prospects, noting that Australia's all-important resource sector was growing for the first time in three years.

Sterling result comes on back of cost cuts and domestic fare hikes

SYDNEY • Australia's Qantas Airways said half-year profit jumped to a record on cost cuts and hikes in domestic fares - which, combined with a share buyback, sent its stock bounding higher.

The results are the latest in a slew of robust earnings for the aviation sector and Qantas chief executive officer Alan Joyce was upbeat about future earnings prospects, noting that Australia's all-important resource sector was growing for the first time in three years.

"We've a lot of work to do to maintain it but, if we deliver on that work, I have no doubt that the company can keep on maintaining this kind of performance," he said at a news conference.

Qantas also outlined plans for its own pilot academy to address a severe pilot shortage globally. The academy will start next year and aims to train 500 pilots a year when fully established.

The "Flying Kangaroo", which controls nearly two-thirds of Australia's domestic market, has pushed average domestic ticket prices to their highest levels in almost a decade while trimming capacity.

At the same time, demand has gathered pace. In addition to the pickup in the resource sector, Mr Joyce said growth in the financial service, construction and infrastructure sectors were driving business travel demand. Leisure demand was also strong, with international tourist numbers at record highs.

Underlying profit before tax, the airline's most closely watched measure, surged 15 per cent to A$976 million (S$1 billion) for the six months ending Dec 31 last year, its best result for a first-half and around 3 per cent higher than the top of its own guidance. Domestic revenue jumped by a fifth.

Investors also cheered a A$378 million buyback, sending its shares up as much as 10 per cent, their biggest daily gain in three years.

"Capacity and capital discipline at a time where demand growth remains robust is driving the stock and its outlook,"said analyst Sondal Bensan of BT Investment Management, Qantas' biggest shareholder, in an e-mail.

Other airlines and aviation firms are also basking in better times for the industry.

Also reporting yesterday, Air New Zealand said it was destined for its second-highest annual profit ever on the back of a tourism boom.

Flight Centre Travel Group, Australia's biggest listed travel agency, sent its shares to a record high after beating half-year profit expectations and lifting its guidance. Its online rival Webjet saw its stock rocket 15 per cent higher as revenue more than tripled.

Last week, Singapore Airlines said it had lifted its quarterly profit by almost two-thirds as passenger numbers and cargo revenues rose.

Qantas also confirmed the purchase of 18 long-range Airbus A331LRneo aircraft for its budget arm Jetstar.

REUTERS

A version of this article appeared in the print edition of The Straits Times on February 23, 2018, with the headline 'Qantas' half-year profit soars to record high'. Print Edition | Subscribe