Qantas doubles annual profit to $263 million

AP News
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Posted: Aug 23, 2011 9:22 PM
Qantas doubles annual profit to $263 million

Qantas Airways Ltd. said Wednesday it more than doubled annual net profit to 250 million Australian dollars ($263 million) and warns that the general operating environment is challenging and extremely volatile.

The Australian flagship carrier's result for the 12 months through June compares with AU$112 million in the previous year.

Investors reacted positively to the announcement, with Qantas shares gaining 2 percent to AU$1.57 in early trading.

Qantas chief executive Alan Joyce said the result was achieved despite a number of challenges facing the company and industry.

"This result reflects the strength of the Qantas Group's portfolio and is our best performance since the global financial crisis," he said in a statement.

"We achieved the result while overcoming significant external and operational factors, including a series of natural disasters, a 28 percent increase in average fuel prices and an underperforming international business," he added.

Qantas announced last week plans to cut up to 1,000 jobs as part of a major shake-up of its loss-making international business that will include the launch of a new Asia-based airline.

It will also launch a budget airline in Japan to be called Jetstar Japan in partnership with Japan Airlines Co. and Mitsubishi Corp.

Qantas International, the international business arm, on Wednesday reported a loss of more than AU$200 million.

"We will continue to focus on improving the customer experience, develop a stronger and broader alliance network and increase our focus on the world's fastest growing aviation region," Joyce told reporters, referring to Asia.

Qantas said underlying profit before tax _ the airline's preferred measure of financial performance _ was AU$552 million, above the AU$377 achieved in the 2009/10 fiscal year.

Analyst forecasts had centered on underlying profit before tax coming in at AU$514 million, while company guidance was for a figure between AU$500 million to AU$550 million.

Qantas said it was not possible to provide profit guidance for the year ahead because of the volatility, uncertain economic conditions and the major changes taking place in the company.

Qantas said it had achieved its result despite a AU$224 million impact from natural disasters, including Australian cyclones, Japanese and New Zealand earthquakes and a tsunami and the Chilean volcanic ash cloud that grounded aircraft for days.

Qantas also expects to increase capacity in the first half of the current fiscal year by 8 percent.

Underlying fuel costs for the first half for the current fiscal year are estimated to increase by about AU$500 million to AU$2.2 billion.