Qantas soars on record profit

The long wait for Qantas shareholders has ended with the airline announcing today it would pay a fully-franked 7 cents per share dividend on the back of a record 2015-16 net profit of $A1.03 billion, up more than 84 per cent on last year.

The $A134m dividend payment is the first since 2009 and comes after the airline is the last 12 months completed a $A505 million capital return and a $A500 million share buy-back.

Staff who agreed to an 18-month  pay freeze will also get a one-off $A3000 cash bonus and there will be an additional on-market share buy-back of $A366 million.

The airline said future surplus capital would be distributed to shareholders via an ordinary dividend and other options, and would be partially franked and unfranked until it built up its balance of franking credits.

The net profit translated to an underlying pre-tax profit of $A1.53 billion, up 57 per cent on last year.

“This is the best result in the 95-year history of Qantas – and the best result in Australian aviation history full stop,’’ Qantas Group chief executive Alan Joyce said.

Every unit in the group was profitable with most reporting record earnings. The once troubled international arm saw a turnaround of more than $A1 billion compared to 2014 with earnings of $A512 million.

Qantas domestic operations reported record earnings of $A578 million, up 20 per cent, despite a $A121 million drop in revenue from the resources market slump.

This was offset by higher revenue from non-resources markets and a reduction in capacity that limited the impact of weaker demand.

Asian-based Jetstar airlines improved their performance by $85 million to contribute to record underlying earnings for the low-cost group of $A452 million, up 97 per cent.  The result included the first full-year profit by Jetstar Japan.

The Qantas loyalty program, which now has 11.4 million members, saw earnings rise 10 per cent to $A346 million.

The airline’s freight division, affected by subdued global cargo markets and the end of “favourable legacy agreements’’ with Australian Air Express, was the only unit to see earnings fall – down 44 per cent to $A64 million.

Effective fuel hedging saw the Group secure a $664 million benefit from lower global fuel prices compared with financial year 2015, passing a proportion of these savings through to air fares – which are up to 40 per cent lower than a decade ago in the Australian market.

The group did not announce any further orders for Boeing 787 aircraft but chief executive Alan Joyce said preparation was well underway for first arrivals next year of eight B787-9 already on order.

“Our first flight I still about 15 months away, but I’m delighted to say that Dreamliner flights on our existing network will be on sale before Christmas,’’ Mr Joyce said.

“And shortly after that, we’ll be announcing other international destinations that this state-of-the-art aircraft will fly to.’’

Mr Joyce said 787 customers could expect luxury suites in business, roomier economy seats with better entertainment options and a revolutionary premium economy “that is streets ahead of anything else out there’’.

Qantas is planning for capacity growth of 2 to 3 per cent in the first half of the current financial year with domestic capacity expected to be flat with to a decrease of 1 per cent, while international capacity is expected to increase by 4 per cent.