Who can argue with Qantas chief executive Alan Joyce now? From copping a lot of flak as the airline sagged in the doldrums, Joyce has gone on to become toast of the town, announcing the strongest profit for Qantas since before the Global Financial Crisis, a shareholder dividend and an order for eight much-needed, fuel-efficient B787 Dreamliner aircraft.
Qantas will pay staff a AUD 90 million bonus. The airline is soaring again, having weathered its toughest years since its 1993 privatisation.
In a nutshell, Qantas yesterday delivered:
- Underlying Profit Before Tax: AUD 975 million
- Statutory Profit Before Tax: AUD 789 million
- Return on invested capital: 16 per cent
- Statutory earnings per share: 25.4 cents
- Proposed capital return and related share consolidation: AUD 505 million, 23 cents per share
For the 12 months to 30 June 2015, Qantas reported an Underlying Profit Before Tax of AUD 975 million and a Statutory Profit Before Tax of AUD 789 million. The underlying result is a turnaround of AUD 1.6 billion compared with financial year 2014, including Qantas’ best ever second half performance, with all segments of the Qantas Group reporting robust profits and returning their cost of capital.
The driving force behind the result was progress with the Qantas Transformation program, which realised AUD 894 million in transformation benefits during the year and saw Qantas meet its target of paying down more than AUD 1 billion in net debt.
Joyce said the milestone acquisition of the next-generation B787-9 Dreamliner for Qantas International marked the scale of Qantas’ turnaround and signalled a new phase of renewal and growth.
“We are halfway through the biggest and fastest transformation in our history,” Joyce said. “Without that transformation, we would not be reporting this strong profit, recommencing shareholder returns, or announcing our ultra-efficient Dreamliner fleet for Qantas International.
“We have reshaped our business for a strong, sustainable future – and because we moved quickly and made tough decisions early, we have strong foundations to build on.”
Qantas will acquire eight Boeing 787-9 aircraft, to be delivered from calendar year 2017 and gradually replace five older Boeing 747s.
“New aircraft types have always unlocked opportunities for Qantas,” Joyce said.
“When our red tail Dreamliners start arriving in two years’ time, their incredible range and fuel-efficiency will create new possibilities for our network.
“For customers, the Qantas Dreamliner’s improved cabin pressure, larger windows and technology to reduce turbulence will deliver the world’s best travel experience.”
Joyce thanked Qantas staff “who have driven this transformation forward with such determination.
“No other company in Australia has people with more pride, more belief and more commitment than those who go to work each day for Qantas.
“Everyone at Qantas made sacrifices as we worked through changes across our business. That sacrifice will be recognised with the AUD 90 million in bonus payments to employees covered by agreements that include an 18-month pay freeze.”
Other factors that had a positive impact on Qantas’ performance in financial year 2015 were lower fuel prices, depreciation savings from the Qantas International fleet impairment, higher revenue per available seat kilometre (excluding foreign exchange), and the repeal of the carbon tax.
All segments of the Qantas Group reported strong profits with record results for Jetstar, Qantas Loyalty and Qantas Freight on an Underlying Earnings Before Interest and Tax (Underlying EBIT) basis. The combined Qantas Domestic and Qantas International result was the best since 2008. Combined Group domestic Underlying EBIT – Qantas and Jetstar – was more than AUD 600 million and Qantas International was profitable on a full-year basis for the first time since before the GFC.
Qantas Domestic reported Underlying EBIT of AUD 480 million, compared with AUD 30 million in financial year 2014, driven by AUD 302 million in transformation benefits and a 4.5 per cent increase in revenue per available seat kilometre.
Qantas International reported Underlying EBIT of AUD 267 million, a turnaround of AUD 764 million compared with a loss of AUD 497 million in financial year 2014. Both Qantas Domestic and Qantas International received record customer satisfaction ratings in financial year 2015.
The Jetstar Group reported record Underlying EBIT of AUD 230 million, up from a loss of AUD 116 million in financial year 2014, driven by strong performances in the Australian domestic and Australian international market. Jetstar International achieved a record profit as it introduced more B787-8s into its fleet.
Jetstar’s New Zealand business was also profitable and all the Jetstar-branded airlines in Asia improved their performance compared with financial year 2014, with losses halved.
Edited by Peter Needham