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 (US$48-97 million) for the 12-month period. This would mark a steep downturn from the AU$552 million 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 AU$202 million 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 AU$4.4 billion – a new record high, and an increase of approximately AU$700 million on the prior year.
Qantas International is expected to report an earnings before interest and tax (EBIT) loss of more than AU$450 million in 2011-12 compared with AU$216 million last year. The airline said that this result includes a AU$100 million one-off cost resulting from last year’s industrial action.
In the domestic market, both Qantas and Jetstar are expected to deliver improved results compared to the previous year, delivering an EBIT of more than AU$600 million.
Qantas’ Group CEO Alan Joyce commented; “We have taken decisive action to mitigate losses in Qantas International by withdrawing from loss-making routes, reducing capital investment, and transforming Qantas engineering. The introduction of a new Qantas Group structure with dedicated CEOs for Qantas International and Qantas Domestic will bring further rigour to our business.
“While there are one-off costs associated with the transformation programme – in the range of AU$370-380 million 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.
IATA recently downgraded its profit forecast for airline in 2012 to US$3 billion, and warned that a further economic downturn could see a net loss for the sector.
