The red roo turns back to black

Qantas is on track to record the most dramatic turnaround in aviation history after the airline today, announced an underlying profit of $367 million, for the six months to December 31 – a stark contrast to the $2.84 billion loss for the financial year ending June 30 2014. 

In more good news, analysts predict that the best is yet to come, with a full year profit topping $1 billion as the full impact of lower fuel costs hit the bottom line.

The result which vindicates the polices of Qantas chief executive Alan Joyce, has been driven by the Transformation Restructuring Program, an end to the domestic price and capacity war, and lower fuel prices.

While the lower fuel prices means greater profit for Qantas, analysts say that their full year profit predictions assume half the gain will be passed onto passengers in lower fares.

The stunning reversal of fortune is expected to lead to a return to dividends for shareholders and an order for up to 30 Boeing 787 Dream liners to re-equip and expand the international fleet.

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Qantas said that the main contributors to the profit were: The transformation program $374 million; $208 million reduce depreciation; $162 million increased revenue per ASK; $59 million from the removal of the carbon tax and $33 million lower fuel prices.

Unit costs were down 4.8 per cent and revenue was up $2.1 per cent to $8.1 billion.

The Group is now targeting $675 million of transformation benefits in financial year 2015, up from the previous target of $600 million. 

Combined with the $204 million in benefits realised in financial year 2014, this will result in total benefits of at least $875 million by 30 June 2015.

All operating segments of the Qantas Group were profitable in the half, at an Underlying Earnings Before Interest and Tax level.

All business units returned to the black including the international division.

Leading the profit charge were: Domestic with underlying EBIT of $227 million; Qantas International $59 million; Jetstar $81 million; Frequent Flyer program $160 million and Qantas Freight $54 million

Qantas CEO Alan Joyce said the result showed that the Group was executing the right plan with discipline and speed.

“The decisive factor in our best half-year result for four years was our complete focus on the Qantas Transformation program,” Mr Joyce said.

“It’s clear that without the impact of transformation, we would not be announcing a profit today."

“Our people have worked hard and made a huge contribution to bring about the change we need.   They deserve great credit for this result."

“What sets this transformation apart is that we are reducing costs permanently while at the same time delivering Qantas’ best ever fleet, product and service."

“We are meeting or exceeding all our targets as we build a sustainable future for Qantas with an emphasis on growing long-term shareholder value."

“Our financial position is significantly stronger because of the actions we’ve taken, and we are giving Qantas a solid foundation for growth in earnings.”