Qantas expects bumper annual profit of up to $A1.4 billion
By Steve Creedy Wed May 3, 2017
Australian carrier Qantas is predicting another bumper full-year underlying pre-tax profit of $A1.35 billion to $A1.4 billion, making it the second highest in the airline’s history.
In a trading update released after the market closed, the airline said it had seen an improving performance from its domestic operations and a “slight moderation” in the challenging conditions facing it in the international market.
The result compares to an underlying profit of $A1.53 billion and a net profit of $1.03 billion in 2015-16.
“Last year we posted the highest earnings in Qantas’ history and our guidance today would make this year’s underlying profit the second best in almost 100 years. It shows we’re able to keep performing in a mixed global environment,” chief executive Alan Joyce said.
“Between our domestic flying businesses, Qantas and Jetstar, and Loyalty we are delivering solid earnings growth.
“Internationally it’s still tough, with high levels of capacity growth pushing fares down, but we’ve seen those conditions ease slightly. Because of the work we’ve done to transform Qantas and expand into growth markets, our international businesses are navigating the headwinds better than our key competitors.”
Group revenue was down 1.4 per cent to $A3.96 billion in the third quarter and unit revenue was down 1.8 per cent.
Domestic unit revenue rose 4.6 per cent compared to the third quarter last year as the airline reduced capacity by 3.7 per cent, including a 19 per cent reduction in the resource sector.
It expects the positive trend to continue in the fourth quarter.
The airline said tough conditions that have seen other airlines in the Asia-pacific record big profit falls had eased slightly in the third quarter as capacity growth in the broader market slowed.
International unit revenue was down by 5.6 per cent year-on-year on a group international capacity increase of 2.2 per cent but the airline said it expected the decline to continue moderating in the fourth quarter as the capacity growth from competitors dropped from high first-half levels to around 5 per cent.
“Taking this into account the Qantas Group expects to report an Underlying Profit Before Tax in the range of $1.35 billion to $1.40 billion for the financial year 2017,’’ it said.
“This reflects improving performance from group domestic and Qantas Loyalty partially offsetting a relatively weaker, but resilient, group International performance in a highly competitive market.’’
The airline said the guidance did not include the impact of bond rate movements which would have an adverse non-cash impact on the underlying profit of $A25 million.
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