News
Qantas eyes $900 million first half profit
December 18th 2015
Qantas Airways Group chief, Alan Joyce, said the company remained "very committed" to returning excess cash to shareholders after Qantas this week forecast it would report a bumper first half before tax profit in the range of A$875 million to A$925 million (US$630-US$666 million). Read More » The forecast was ahead of most analysts’ expectations and almost as high as the $975 million it reported in 2014-2015. The predicted profit, for the period ending December 31, will be largely due to cheaper fuel, cost-cutting and improved RASKs (Revenue Available Seat Kilometres), which in turn has resulted in a 10% expansion in the carrier’s international business in the past year, Joyce said.
"The board is very committed to capital management and to doing it when the business is giving appropriate returns and the forward outlook is right," he told The Australian Financial Review on Tuesday after his market update. "The business, as you can see, is performing very well." The oneworld carrier said any cash beyond the estimated capital budgets of $1.2-$1.5 billion over the next three financial years would be returned to shareholders, rather than investments such as ordering B787-9 aircraft in excess of the initial eight due for delivery from 2017. "We have always said the optimum age for the fleet is between eight and 10 years and it is actually below that at the moment," Joyce said.
Qantas will continue to improve its RASK figures after it noted improved numbers in the domestic and international markets in the last five months, Joyce said. "I always use the example that if I carry two passengers this year at $50 and next year I only carry one passenger at $100, my yield has gone up by 100%, but I haven't got any more revenue," he said. "So RASK, which is what your overall revenue is doing, is a better combination of load [seats filled] and yield and gives you a better indication of the revenue generating health of the business."
Joyce said Qantas and its budget subsidiary, Jetstar Airways, both reported higher RASK increases than rival, Virgin Australia, in the domestic market last year because as Virgin’s fares rose, it sold fewer tickets than it had in the previous year.
Qantas rival, Air New Zealand (Air NZ), is looking at posting solid half-year figures as well. Speaking to Orient Aviation’s Week in the Asia-Pacific at the Star Alliance board meeting in Chicago last week, Air NZ chief, Christopher Luxon, said the performance figures for the first six months were looking “very well”, with another bumper profit this year “possible”.
