Qantas posts $244m loss, cancels order for 35 B787s

[Radi K]

http://www.news.com.au/business/qant...-1226456359030

QANTAS boss Alan Joyce has cited an "uncertain global context" as the reason for the airlines' decision to surprisingly cancel a US$8.5 billion new investment in 35 new airliners.
While announcing a larger than expected loss for the carrier in Sydney this morning, Mr Joyce blamed "record" high fuel bills and transformation costs as factors influencing the airline's statutory loss after tax of $244 million.
Morningstar analysts has expected a statutory loss of $198 million after restructuring costs of between $370 million and $380 million.
"Clearly we have been through an exceptional period," Mr Joyce said.
The loss for the 12 months to June 30, 2012, compares with a net profit of $250 million in the previous year.
The result was at the upper end the airline's expectations of between $50 million and $100 million.
Mr Joyce said the cancellation of an order for 35 new Boeing 787s was due to ``lower growth requirements in this uncertain global context''.
``With lower capital requirements and substantial liquidity, we are now turning our attention toward debt reduction to strengthen the balance sheet,'' Mr Joyce said in a statement.
Fuel costs rose 18 per cent to a record $4.329 billion, Qantas said.
Qantas says it will cancel its firm order for 35 Boeing 787-9 aircraft, representing a an $US8.5 billion reduction in capital expenditure at list prices.
"Qantas continues to practice disciplined capital management and, in the context of returning Qantas International to profit, this is a prudent decision,'' said Mr Joyce.
Mr Joyce said Qantas's international operations, which were being restructured, lost about $450 million and was the only part of the airline group not to be profitable in 2011-12.
Qantas did not offer guidance, saying the operating environment and economic outlook for the first half of 2012-13 "remains challenging, volatile and dependent on a number of uncontrollable external factors''.
Qantas shocked the market with a massive earnings downgrade in June, slashing its underlying profit before tax estimates to between $50 million and $100 million for the year to June 30, 2012.
Goldman Sachs analyst Andrew Gibson said in a June note to clients that this years' earnings should benefit from the end of industrial action last year,the cutting of loss-making routes and other restructuring initiatives.
However risks remain from increased competition in the domestic market, which has been Qantas's best-performing division.
``With this volatility in global conditions, fuel and foreign exchange rates, as well as the ongoing internal transformation we have underway, it would be imprudent to offer profit guidance at this time,'' Mr Joyce said.