Qantas was successful to write up a profit of A$ 111 million for the first half of its current financial year, up by 164% over the same period of the previous year. It underlines the success of the current airline’s restructuring and its recent alliance with Emirates.
SYDNEY- Australia’s Qantas banked compensation from Boeing for Dreamliner delays and slashed international losses in Thursday reporting a surge in six-month net profit, but warned of turbulence ahead.
The flagship carrier also announced a fleet upgrade, after last year posting its first annual loss since privatisation in 1995 amid tough competition, industrial action and high fuel costs.
Over July-December 2012, Qantas said overall net profit jumped 164 per cent from the same period in 2011 to A$111 million, and it underlined a strategic focus on Asia under a new alliance with Emirates.
Peter Borkovec of White Funds Management said investors expected a recovery in Qantas’s fortunes. “It’s about where the company is coming from and whether its strategy is heading in the right direction,” the fund manager said. “Investors can see it’s working, and given Qantas’s low valuation you can understand why the market is taking this positively.”
Overall, underlying profit before tax — the airline’s preferred performance measure — rose 10 per cent to A$223 million. The group’s ailing Qantas International arm reported underlying pre-tax losses of A$91 million, an improvement of A$171 million.
But that improvement included A$125 million from the August restructuring of the group’s B787 Dreamliner order, with the troubled Boeing plane suffering lengthy production delays. It is now grounded worldwide over a safety scare. Also included was A$30 million from the sale of a local unit. “Qantas International is well advanced in its turnaround plan,” group chief executive Alan Joyce told a news conference, pointing to cost-cutting and closure of loss-making routes.
And underlying pre-tax profit for the domestic service was halved to A$110 million, in what Joyce called a highly competitive field where rivals have pumped up capacity to claim market share from Qantas.
He forecast capacity growth of five to seven percent for Qantas in the first six months of 2013.
Moody‘s ratings agency said Qantas remained one of few investment-grade rated carriers globally and its Baa3 rating continued to reflect the airline’s strengths, strong domestic franchise and sound liquidity.
“The company has very importantly shown positive traction in executing on its international business transformation which we see as being core to the maintenance of its investment grade rating”, said Ian Lewis, a Moody’s vice president.
“At the same time we see challenges … in maintaining yield in the domestic market where it has drawn a line in the sand at 65 percent market share and is showing some evident yield and load weakness.” Qantas also announced orders for five new Boeing 737-800s for 2014 delivery and the upgrade of 30 Airbus A330s.
“Growing with Asia is a major priority for the Qantas Group and this investment underpins our commitment to the region,” a statement said.
The Asia expansion will be underpinned by the Flying Kangaroo’s alliance with Dubai-based Emirates, freeing services to Asia from onward links to Europe.
(Source: AFP)
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
