Joyce: ‘Qantas is through the worst’

Qantas has said it is focusing on its 2015 turnaround plan after posting an underlying loss before tax of AU$646 million for its latest financial year.

The Australian carrier posted a statutory loss after tax of AU$2.8bn for the 12 months ending 30 June 2014 although its transformation has already generated AU$440m in benefits.

In February the carrier accelerated an AU$2bn programme to reduce costs and build foundations for growth with more than half the money already on completed projects or others underway.

CEO Alan Joyce said the airline had come ‘through the worst’ after making half of its set 5,000 redundancies and off-loading several aircraft.

“There is no doubt today’s numbers are confronting, but they represent the year that is past,” said Joyce. “We have now come through the worst. With our accelerated Qantas Transformation programme we are already emerging as a leaner, more focused and more sustainable Qantas Group. There is a clear and significant easing of both international and domestic capacity growth, which will stabilise the revenue environment.”

Its domestic business showed an underlying EBIT of AU$30m, down from AU365m year-on-year, while its international business posted a deeper loss of AU$497m compared to a loss of AU$246m year-on-year.

With changes underway Joyce expects the group to return to an underlying profit before tax in the first half of its next financial year.

Qantas announced a structural review in December 2013 where it will look to sell off non-core assets such as airport terminals, property and land holdings to repay its debts, while no new Jetstar ventures will be established while the group is under review. Its Qantas Loyalty programme will remain part of the business, while work is underway to establish a new holding structure and corporate entity for Qantas International after the group split its domestic and overseas businesses.

“After an extremely difficult period, we are focused on building momentum with our turnaround in FY15,” Joyce said. “Our cash balance and liquidity position is strong, and the Group’s overall financial performance is rapidly improving. We are removing costs to drive earnings growth. And the work we’ve done over recent years to renew our fleet and improve service has been recognised with a string of awards and record customer satisfaction.”