ID :
16654
Fri, 08/22/2008 - 16:40
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Shortlink :
https://oananews.org//node/16654
The shortlink copeid
Qantas profit up but outlook uncertain
AAP - Qantas Ltd expects a 41 per cent fall in profit this financial year as the airline faces the headwinds of rising fuel costs and a slowing global economy.
Qantas said pre-tax profit in 2008/09 was likely to be in line with the analyst consensus forecast of $825 million, after reporting a rise of 46 per cent to $1.41billion for the 12 months to June 30.
Net profit for the year to June rose 44.1 per cent to $969 million as the airline benefited from strong demand in the early part of the period, the company said in astatement. The result was a little below the consensus forecast of $1.02 billion.
"This time last year was one of the sweetest spots in aviation," chief executiveGeoff Dixon told a media conference.
"The business, particularly at the leisure end, is soft ... and there is a downturn.
I know there are real issues out there." Qantas has moved to increase flexibility and control costs by using its budget Jetstar brand for less profitable routes and cutting the number of flights operatingbelow capacity.
In response to the rising cost of fuel, Qantas has hedged its orders and will be introducing new and more efficient planes, including the Airbus A380 and Boeing 787while raising ticket prices where necessary.
Shares in Qantas gained eight cents, or 2.35 per cent to close at $3.48 as the S&P/ASX 200 Index fell 1.1 per cent. Qantas shares closed at $3.01 on June 25, thelowest in two years.
ABN Amro Morgans analyst Mark Williams agreed that Qantas was in a better positionthan a lot of other airlines.
"It is a more difficult environment going into 2009," said Mr Williams, who ratesQantas a hold with a 12 month target share price of $3.20.
"The fuel price and the slowing economy out there are having a dampening effect." Mr Dixon said the whole industry had been hit by the unprecedented surge in fuelcosts since December last year.
"The biggest determinant in this industry without a doubt is fuel and who would knowwhere fuel could be in three years time," Mr Dixon said.
At current prices, Qantas expects its fuel bill to rise by more than $1.6 billion in 2008/09. Mr Dixon said Qantas had hedged 81 per cent of its fuel at $US118 per barrel for the 2008/09 year, and that was in options so the company could benefit ifthe price fell.
"They benefited from a lot of fuel hedging that was in place and that was how theywere able to maintain a solid profit," Mr Williams said.
Chief executive designate Alan Joyce said flexibility and planning would help Qantasto overcome the challenges.
"The choice of growing one brand or the other depending on market conditions givesus huge flexibility," Mr Joyce said.
Qantas' results for 2007/08 for the first time included separate reporting for the Qantas Frequent Flyer (QFF) and Qantas Freight businesses as the company positionsits portfolio for greater growth and potential divestment.
Qantas said its board will decide next month whether a proposed partial initialpublic offer (IPO) of shares in its loyalty business will go ahead.
"The board will make a decision in September and it will be subject to marketconditions," Mr Dixon said.
The airline's frequent flyer business made a pre-tax profit of $234 million in theyear.
Its freight business, including Qantas Cargo and Express Freighters Australia made apre-tax profit of $64 million, down $1 million.
Net passenger revenue, including ticket fuel surcharges, increased 6.2 per cent to $12.1 billion helping boost total group revenue increased 7.5 per cent to $16.192billion.
Traffic, measured in revenue passenger kilometres, rose five per cent while yieldimproved by 1.2 per cent.
Mr Dixon said Qantas had confronted a number of challenges in recent months,including the QF30 decompression incident in the Philippines.
"We will work through these issues and implement any changes that may be requiredbut our commitment to safety should never be questioned," he said.
The company will pay a final dividend of 17 cents per share fully franked, takingthe full-year payment to 35 cents, compared with 30 cents for the year before.
Qantas said pre-tax profit in 2008/09 was likely to be in line with the analyst consensus forecast of $825 million, after reporting a rise of 46 per cent to $1.41billion for the 12 months to June 30.
Net profit for the year to June rose 44.1 per cent to $969 million as the airline benefited from strong demand in the early part of the period, the company said in astatement. The result was a little below the consensus forecast of $1.02 billion.
"This time last year was one of the sweetest spots in aviation," chief executiveGeoff Dixon told a media conference.
"The business, particularly at the leisure end, is soft ... and there is a downturn.
I know there are real issues out there." Qantas has moved to increase flexibility and control costs by using its budget Jetstar brand for less profitable routes and cutting the number of flights operatingbelow capacity.
In response to the rising cost of fuel, Qantas has hedged its orders and will be introducing new and more efficient planes, including the Airbus A380 and Boeing 787while raising ticket prices where necessary.
Shares in Qantas gained eight cents, or 2.35 per cent to close at $3.48 as the S&P/ASX 200 Index fell 1.1 per cent. Qantas shares closed at $3.01 on June 25, thelowest in two years.
ABN Amro Morgans analyst Mark Williams agreed that Qantas was in a better positionthan a lot of other airlines.
"It is a more difficult environment going into 2009," said Mr Williams, who ratesQantas a hold with a 12 month target share price of $3.20.
"The fuel price and the slowing economy out there are having a dampening effect." Mr Dixon said the whole industry had been hit by the unprecedented surge in fuelcosts since December last year.
"The biggest determinant in this industry without a doubt is fuel and who would knowwhere fuel could be in three years time," Mr Dixon said.
At current prices, Qantas expects its fuel bill to rise by more than $1.6 billion in 2008/09. Mr Dixon said Qantas had hedged 81 per cent of its fuel at $US118 per barrel for the 2008/09 year, and that was in options so the company could benefit ifthe price fell.
"They benefited from a lot of fuel hedging that was in place and that was how theywere able to maintain a solid profit," Mr Williams said.
Chief executive designate Alan Joyce said flexibility and planning would help Qantasto overcome the challenges.
"The choice of growing one brand or the other depending on market conditions givesus huge flexibility," Mr Joyce said.
Qantas' results for 2007/08 for the first time included separate reporting for the Qantas Frequent Flyer (QFF) and Qantas Freight businesses as the company positionsits portfolio for greater growth and potential divestment.
Qantas said its board will decide next month whether a proposed partial initialpublic offer (IPO) of shares in its loyalty business will go ahead.
"The board will make a decision in September and it will be subject to marketconditions," Mr Dixon said.
The airline's frequent flyer business made a pre-tax profit of $234 million in theyear.
Its freight business, including Qantas Cargo and Express Freighters Australia made apre-tax profit of $64 million, down $1 million.
Net passenger revenue, including ticket fuel surcharges, increased 6.2 per cent to $12.1 billion helping boost total group revenue increased 7.5 per cent to $16.192billion.
Traffic, measured in revenue passenger kilometres, rose five per cent while yieldimproved by 1.2 per cent.
Mr Dixon said Qantas had confronted a number of challenges in recent months,including the QF30 decompression incident in the Philippines.
"We will work through these issues and implement any changes that may be requiredbut our commitment to safety should never be questioned," he said.
The company will pay a final dividend of 17 cents per share fully franked, takingthe full-year payment to 35 cents, compared with 30 cents for the year before.
