Qantas Airways optimistic despite profits dip

Australia’s Qantas Airways yesterday announced a 4.3 per cent drop in full-year net profits but voiced cautious optimism for the industry after its battering in the financial crisis.

Net profits were A$112 million, down from 117 million a year earlier, while underlying pre-tax profits rose three-fold to 377 million after last year’s massive cost-cutting.

“While global trading conditions remained challenging, they continued to improve, and the Qantas Group has delivered a strong result, more than tripling its full year profit year-on-year,” chief executive Alan Joyce said.

“International demand and yield across the business and leisure sectors continue to improve and domestic business demand is also strengthening,” he added.

Mr Joyce said all sectors of the group, including budget offshoot Jetstar, were profitable, and that the company expects to increase capacity in the first half of next year. But Qantas did not pay a dividend to shareholders for the second year running, and declined to forecast future profits “given the volatility and uncertainty of the aviation market”.

Mr Joyce said the company, which pledged to dramatically slash costs as profits dived 88 per cent last year, was seeing “encouraging signs” as freight and premium travel pick up.

“We are seeing some very good signs of improvement. Our freight business has seen a real improvement and our premium business has seen a recovery,” he told public broadcaster ABC.

“We’ve seen some very encouraging signs. We’re starting to become more optimistic about the future,” Mr Joyce added.

The Qantas group controls about two-thirds of the domestic market and some 30 per cent of international passenger movements in Australia.

Analysts said the result was largely as expected, although Qantas’s share price dropped 1.20 per cent to 2.48 dollars in the wake of the announcement.

“This was driven by a stronger contribution from Jetstar business, while Qantas mainline and Qantas Holidays were slightly weaker than we expected,” a Goldman Sachs analyst told Dow Jones Newswires.