Qantas earnings drop, but still remain solid

Qantas Airways, Australia’s biggest airline, said on Friday (25 August) its net profit fell following a one-off gain last year

25th Aug 2017


 Qantas earnings drop, but still remain solid

 

Qantas Airways, Australia’s biggest airline, said on Friday (25 August) its net profit fell following a one-off gain last year and as the benefits of lower fuel prices were offset by the reduction in net passenger revenue. The Qantas Group said net profit in the year to June 30 was A$853 million (US$673 million) down from A$1.03 billion in the prior year, which included the gain on sale of the Sydney Domestic Terminal. Qantas said the result was slightly ahead of guidance due to strong domestic performance.

 

The airline also said it was setting new cost-cutting targets and CEO Alan Joyce said the airline would implement its plans for new non-stop flights from Sydney to London and New York. Joyce also said the underlying profit “vindicated” the airline’s three-year turnaround strategy and said the airline would find A$400 million ($315.92 million) in savings each year. Joyce said the airline would look to add more seats to its low-cost carrier arm Jetstar and work on shortening aircraft turnaround times and introducing more modern planes like the 787-9. Qantas said it would cut domestic capacity by 1 percent in the first half, in a move expected to drive up ticket prices further. The cuts would come primarily on routes used by the resources sector, where demand had fallen. International capacity would rise 5 percent in the half as it shifts aircraft to growing markets in Asia.

 

The airline said it would buy back A$373 million of shares and spend A$55 million on bonuses, giving 25,000 non-executive staff A$2,500 each. Qantas also confirmed plans to sell non-stop, 20-hour flights from Sydney to London and New York by 2022 if Airbus SE or Boeing Co deliver aircraft capable of travelling the distance.

 

"This is a last frontier in global aviation. The antidote to the tyranny of distance," Joyce said. 

 

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