Qantas predicts profit downturn
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The Qantas Group has announced a gloomy profit forecast for the financial year ending 30 June 2012.
The Australian airline revealed today that it expects to generate pre-tax profits of AU$50-100 million (£31.7-£63.4m) for the 12-month period. This would mark a steep downturn from the £350m it achieved in the 2010-11 financial year. It would also mean the airline has seen miserable second half, having recorded pre-tax profits for £128m in the first half of this year.
Qantas said the forecast reflects the “deterioration in global aviation operating conditions”, caused by the eurozone crisis, capacity growth in domestic markets and rising fuel prices. In terms of fuel, Qantas said it expects its jet fuel bill will total £2.79bn – a new record high, and an increase of approximately £444m on the prior year.
“We have taken decisive action to mitigate losses in Qantas International by withdrawing from loss-making routes, reducing capital investment, and transforming Qantas engineering,” said Qantas’ Group CEO Alan Joyce. “While there are one-off costs associated with the transformation programme – in the range of £234-241m for the full year 2011-12 more than half of which are non-cash items – these costs will be outweighed by the long-term benefits of increased efficiency and competitiveness.
“We remain focused on returning Qantas International to profitability in 2014 and for Qantas International and Domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011,” he added.
Qantas International is expected to report a loss of more than £285m in 2011-12 compared with AU$216 million £137m last year, while Qantas Domestic is forecast to deliver improved, with EBIT of more than £380m.
