Qantas ‘on track’ after record loss
Qantas is said to be ‘on track’ for a positive first-half underlying profit after posting a record $2.8 billion net loss in August, according to chief executive Alan Joyce.
Speaking at the carrier's AGM on Friday, Joyce said the “evidence grows daily that we are on track” with plans to turn the national carrier into delivering profits in 2015, citing improved passenger loads in September.
“Yield at Qantas International has now been positive for six consecutive months as revenue and network initiatives from the transformation program take hold,’’ Joyce said.
“Preliminary figures indicate that the group has made an underlying profit before tax for the first quarter of financial year 2015.’’
Joyce said its Transformation program, coupled with a more “benign operating environment” was delivering “clear results” for the group.
In particular, Joyce highlighted the benefits from the lower Australian dollar which was well hedged for both foreign exchange and fuel risk for the remainder of FY 2015, as well as capacity growth for its international operations for the first half expected to be 2.4%.
“The weaker currency does mean higher Australian dollar fuel prices, but the falling oil price has more than offset the falling currency over the past six months,” Joyce said.
Joyce said domestic industry-wide capacity growth was expected to be around 1% in the first half, “well below the long run average of 3 to 4%”.
“Based on the published schedules we now expect growth to be flat – that is zero market capacity growth for the first half,” Joyce said.
“We have adjusted our own domestic capacity to reflect the current weak demand environment. We will continue to manage our capacity with a careful eye on demand and will always retain the flexibility to ensure our competitive advantages are never jeopardised.’’
By the end of FY15, Joyce said the group will have completed 80% of the 5000 redundancies planned, as well as paid off $1 billion in debt.
“There is a deep resilience within Qantas and a hunger for success,” Joyce said.
“We can never go back to the cost base and inefficient work practices that left us at such a disadvantage against our competitors and put our future at risk.”
“Instead we will forge ahead and establish a new platform for our ongoing success and a sustainable premium airline model for our times.”
Qantas chairman Leigh Clifford told shareholders the underlying loss before tax of $646 for FY14 was a “totally unsatisfactory result” but blamed market growth, fuel costs and “weaker general demand in the domestic market” for both business and leisure travel.
Clifford said the Australian economy was in “transition” and the immediate outlook “somewhat mixed”.
“There is still general cautiousness among consumers that is affecting all sectors of the Australian economy,” he said.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
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