Qantas Group Results

[Sarah C]

I find this part very interesting:

"Jetstar will launch five A320 services a day between Sydney and Melbourne Tullamarine on 25 October"

[Daniel F]

This is another intersting part:

“Given the strategic value of Qantas Frequent Flyer to the Group, we will be retaining full ownership for the foreseeable future.”

[Jason H]

five A320 services a day between Sydney and Melbourne Tullamarine

That's ridiculous. Why on earth would they want to do that???

[Daniel M]

from news.com.au

Qantas profit dives 88pc, cuts dividend

QANTAS has announced an 88 per cent plunge in profits and says it aims to cut costs by $1.5 billion over the next three years.

Shares in Qantas (qan.ASX:Quote,News) surged on the results in early trade.

The massive cost reduction program, called Q Future, would target "sales and distribution, fuel conservation, aircraft utilisation and schedule, and procurement," Qantas chief executive Alan Joyce said in a statement today.

Mr Joyce said that there would be no more job cuts, a spokesman, Simon Rushton, said.

The airline has already reduced 1250 staff positions that it maintains were not needed due to capacity cuts.

It has also cut 590 management and senior positions since the start of the year and reduced the total level of executive pay by one-quarter.

The airline will buy more than 160 new aircraft over the next 10 years but also said it had deferred or canceled US$7.9 billion ($9.5 billion) in other aircraft deliveries.

Mr Joyce said the negotiation of changes to aircraft purchases, in response to the economic downturn, had helped preserve cash and would ensure ongoing investment in these core areas.

"Having adjusted our orders earlier this year, we remain committed to the Boeing 787 program and continue to monitor developments closely," Mr Joyce said.

Qantas would now take four to five A330-200 aircraft, for delivery from November 2010 and to provide for growth of Jetstar's long-haul international operation.

Qantas will not sell its Frequent Flyer program

Mr Joyce said Qantas Frequent Flyer loyalty program achieved standout returns during the year, which helped offset the demand and revenue declines experienced by Qantas.

"Given the strategic value of Qantas Frequent Flyer to the group, we will be retaining full ownership for the foreseeable future," Mr Joyce said.

Profit down 88 per cent

The airline had a 2008/2009 net profit of $117 million, down 87.9 per cent on last year.

Qantas' sales for the 12 months to June 30 fell 6.9 per cent to $14.55 billion and the company said no final dividend would be paid for the 2008/09 year.

In relation to outlook, Qantas said that there were signs of an improvement in passenger volumes.

Yields had also stabilised at the levels experienced in the second half of the 2009 financial year.

"High levels of volatility in the economic outlook, industry capacity, passenger demand, fuel prices and exchange rates continue," the company said.

"Given the high level of uncertainty, it is not possible to provide any profit guidance."

The airline said that under present circumstances, the board considered it prudent not to pay a final dividend.

Future dividends would be assessed against ongoing earnings performance and capital requirements.

Mr Joyce said the diversity of the Qantas group's operations had contributed to it being one of the few airlines worldwide to produce a full year profit during the global economic downturn.

A year of "two halves"

Mr Joyce said the 2008/09 year was one of two contrasting halves, with the first half characterised by a generally favourable operating environment and strong demand.

In the second half, the environment deteriorated as competitors continued to lift capacity while demand softened quickly as the global slowdown hit.

This was compounded by protracted industrial action, swine flu and costs associated with introducing the new A380 aircraft.

The airline's full year profit before tax was $181 million, down 87 per cent, which compared to its guidance for a result between $100 and $200 million.

Qantas said weaker domestic and international demand had led to a 4.3 per cent yield decline and a 1.1 per cent decrease in seat factor (load) to 79.6 per cent for the group.

It also resulted in capacity cuts of 1.9 per cent across the group, which led to the removal of some variable operating costs as well as reduced revenue.

But Qantas' budget offshoot, Jetstar, increased capacity during the year through network growth.

[Andrew P]

still a profit, not bad in the circumstance

[Michael Mak]

five A320 services a day between Sydney and Melbourne Tullamarine

Meanwhile they are cutting their SYD-AVV flights to 4 flights/day.

Originally Posted by Jason H

That's ridiculous. Why on earth would they want to do that???

They are launching SYD-MEL in response to TT. Why would people want to fly to AVV when TT to MEL is cheaper? AVV isn't exactly close to Melbourne CBD. The question is how will AVV survive in the long run?

[NickN]

Given the immediate surge in share price the market obviously feels this was a good outcome. To be honest I was expecting worse.

The new financial year is going to be a very interesting one, I am eager to see how they perform how well they start to recover.

[Ryan K]

How long will it be until we see all Melbourne JQ flights operate from Tullarmarine? Since Tiger, there has been a growing trend for JQ to use MEL a lot more than AVV.