Aviation

Qantas half year profits slip by 25%

Hannah Edensor

Hannah Edensor

Qantas has unveiled its half year results to December 2016, posting an underlying profit before tax of $852 million, after taking out costs for things like operation restructures and redundancies.

But the profits, which work out to be $515 million after tax, show a dip of 25 per cent, while revenue was down by 3.3 per cent to $8.184 billion.

The fall in statutory profit was put down to the fact that the previous half year’s profit included $201 million from the sale of Qantas’ Sydney Airport terminal.

Meanwhile, Air New Zealand recorded a slide in profits also, down from $457 million to $349 million, and Flight Centre plummeted 36 per cent to $74.4 million net profit. Webjet on the other hand, reported record profits almost four times its previous half year results.

Qantas also claimed net passenger revenue lost $243 million compared to the previous period, landing at just over $7 billion.

In terms of operations, both domestic and international, they too fell, with earnings before tax and interest down $16 million to $371 million for domestic, and down $62 million to $208 million for international.

It comes off the back of a number of innovations from Qantas, including its Facebook Messenger bot, in-flight streaming of Netflix and Spotify, and the airline getting rid of pesky window shutters. This week, Roy Morgan awarded Qantas the title of most satisfying airline in the country.

CEO Alan Joyce was also recently named as one of the most inspiring people in the gay community in Cosmo magazine’s inaugural ‘Pride’ issue, which featured the likes of Kylie Minogue and Ruby Rose.

Qantas unveiled its latest order of Premium Economy seats at this morning’s briefing too.

Despite the dip in profits, Joyce was adamant Qantas is one of the best performing airline groups in the world.

“Our transformation program has built a strong, sustainable business that generates returns throughout the economic cycle,” Joyce said.

“Qantas and Jetstar’s domestic operations produced an outstanding result and Qantas Loyalty continued to thrive. It’s a combination that keeps delivering and sets us apart from our competitors.

But, as Joyce admitted, the “international market is tough”, due to capacity growth and lower fares, which he said Qantas International is not immune to.

“Not surprisingly, [Qantas International’s] profit is down on last year’s record levels.

“But the work we’ve done on removing costs and making the business more efficient means Qantas International is outperforming its peers in the region.

“Our focus is to stay disciplined on capacity, keep downward pressure on costs, and introduce game-changing improvements like the Dreamliner and high-speed Wi-Fi.

“This result is a credit to the hard work and dedication of our people, who have helped deliver high levels of customer satisfaction right across Qantas, Jetstar and Loyalty.”

The Jetstar Group overall reported another strong half year profit, helped by solid domestic performance, while its international operations benefited from growing demand between Australia and destinations like Indonesia and Thailand.

“Starting next financial year, we’ll be targeting an annual average of $400 million in cost and revenue benefits to make sure we have a sustainable business for the long term,” Joyce added.

“Internationally, the market will remain challenging – but we expect the revenue trend we saw in the first half to moderate.

“We’re focused on continuous improvement, driving cost and revenue benefits from new technology and efficient operations, and making sure that we hold and strengthen our competitive position in the market.

“Put it all together, and it’s clear that our strategy to build a balanced and resilient portfolio is on track.”

 


SEE WHAT PEOPLE ARE SAYING

One response to “Qantas half year profits slip by 25%”

  1. …. I always think capacity is not the culprit that pulls down airlines profit… for me it is the frequency of flight schedules… with the advent of a380 which is said to be fuel efficient and capacity booster, I don’t see any reason why flight frequency should not be minimised… if passengers truly care about the environment then they can always work around flight schedules…

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