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Qantas has reported a loss $A2.8 billion – nearly three times the expected billion-dollar loss tipped by analysts.
The underlying loss before tax is $A646 million for the 12 months ended June 30 while statutory loss after tax of $2.8 billion is made up of a non-cash fleet write down of $A2.6 billion.
The airline says its operating result is driven by the cumulative impact of two years of industry capacity growth ahead of demand, leading to a $A566 million decline in revenue and fuel costs of $A4.5 billion - up $A253 million from the previous year.
The loss is a stark contrast with those of competitors Singapore Airlines, Cathay Pacific and Air New Zealand, which yesterday reported a record $262 million after-tax profit.
The result also contrasts with the 2009-13 performances of these airlines in which Cathay Pacific made $A3.8 billion, Singapore Airlines $A2.5 billion and Air New Zealand $A358 million. In the same period, Qantas has made $A240 million before it was wiped out in today’s result.
Chief executive Alan Joyce says, “There is no doubt today’s numbers are confronting, but they represent the year that is past. We have now come through the worst.
“With our accelerated Qantas transformation programme we are already emerging as a leaner, more focused and more sustainable Qantas Group. There is a clear and significant easing of both international and domestic capacity growth, which will stabilise the revenue environment.
“We expect a rapid improvement in the Group’s financial performance – and a return to underlying [pretax] profit in the first half of [2015 fiscal year], subject to factors outside our control.”
Significant one-off costs in the statutory result, include restructuring and redundancies ($A428 million) and primarily non-cash costs relating to early aircraft retirements ($A394 million). Of the 5000 staff redundancies announced in February, 2500 have been implemented as at August 28.
Qantas says it has adjusted its capacity and network in response to shifts in demand and the competitive environment – while retaining flexibility to make further adjustments if required.
For example, international competitor capacity growth is expected to be 2.4% in the first half of FY15 and domestic market capacity growth is expected to be around 1%, significantly below recent trends for both markets.
Jetstar loses ground in NZ
Jetstar, the discount unit of Australian airline Qantas Airways, lost ground in New Zealand, while claiming better yields on key routes, as its parent plunged into the red after slashing the value of its international fleet.
The discount airline had 20.7 percent of New Zealand's domestic market at June 30, down from 22.4 percent a year earlier, Qantas said today when releasing its annual result. Passenger numbers dropped 7.7 percent to 1.72 million and revenue passenger kilometres fell 6.2 percent to 1.13 million. Capacity shrank 4.5 percent to 1.42 million available seat kilometres.
The airline's unit said it had a strong and improving second-half performance across key metrics leading into the 2015 financial year, and had "strong yield improvement on key routes," according to presentation slides accompanying the release.
Qantas didn't break out any financial figures for domestic the New Zealand service, which are part of the wider Jetstar segment. The Australian discount airline reported a loss before interest and tax of A$116 million in the 12 months ended June 30, on a 2 percent fall in revenue to A$3.22 billion.
(With reporting from BusinessDesk)