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Australia's Qantas reports record profit despite woes
2008-08-21
SYDNEY (AFP) - Australia's national airline Qantas reported Thursday a 44 percent increase in annual net profit to a record 969 million dollars (842.6 million US) despite high fuel prices and other woes. Qantas said revenue for the year ended June 30 rose 7.5 percent to 16.19 billion dollars after it carried 38.6 million passengers, up 6.0 percent. The airline recorded a 46 percent increase in profit before tax to 1.41 billion dollars, ahead of its forecast of at least 40 percent growth. The profit result comes after the airline said in July that it would slash 1,500 jobs worldwide in a bid to combat the impact of rising oil prices and challenging market conditions. The carrier also cancelled plans to hire 1,200 new staff and increase its capacity by eight percent in 2008-2009, and announced it would retire up to 22 older aircraft from its fleet. Chairman Leigh Clifford said that after an excellent performance across all segments for the first three quarters, the business was starting to see the effects of a slowing economy and rising fuel prices. "We have benefited from a strong revenue environment, which was supported by major investments in customer service and product. The result was further underpinned by sustained efforts to improve efficiency," he said. The company said that although fuel prices had eased over the past month "they have not declined to levels that will sustain the current level of profitability, and fuel and economic conditions continue to be uncertain." Qantas said pre-tax profit in this financial year was likely to be in line with the analyst consensus forecast, which chief executive Geoff Dixon told reporters was around 750 million dollars. Dixon acknowledged in a statement that the airline had "confronted a number of challenges in recent months." These included a mid-air blast, believed to be caused by an exploding oxygen bottle, which blew a hole into the fuselage of a plane last month and forced an emergency landing in Manila. Coupled with the impact of an industrial dispute with aircraft engineers, the incident "caused significant disruption for our passengers and impacted Qantas's financial and operating performance in recent months," he said. Qantas flights suffered a series of embarrassing incidents in the wake of the forced landing in Manila, from a small body panel falling off a jet en route to Singapore and an engine losing power on the way to New Zealand. Qantas also pulled six planes from service after it found that a maintenance procedure, reportedly designed to stop cracking in the forward pressure bulkhead, had been omitted. The incidents have led to Australia's Civil Aviation Safety Authority (CASA) subjecting the airline to a special safety review. "We understand the level of scrutiny we are being subjected to at present," said Dixon. "We will work through these issues and implement any changes that may be required, but our commitment to safety should never be questioned. "Qantas has an unrivalled safety record, and safety will always remain our number one priority." Qantas engineers, meanwhile, announced they had accepted a wage deal offered by the airline, bringing months of irregular industrial action to an end. Australian Licensed Aircraft Engineers Association secretary Steve Purvinas said the dispute had been resolved with all members getting a minimum of four percent more income per year. "The company is certainly fairly well placed to share the profits with the workers who helped achieve these profits," Purvinas said. ABN Amro Morgans analyst Mark Williams said that while Qantas was in a better position than a lot of other airlines "it is a more difficult environment going into 2009." "The fuel price and the slowing economy out there are having a dampening effect." Dixon will step down in November and be replaced by Alan Joyce, the head of Qantas's budget subsidiary Jetstar. Qantas declared a final dividend of 17 cents per share, taking the full-year payment to 35 cents, up from 30 cents last year. The airline's shares closed up eight cents or 2.4 percent at 3.48 dollars.
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