Qantas announces profits jump, share buy-back
Australian flag carrier Qantas said that its annual net profit surged 50 per cent to a record $719.4 million as robust passenger demand offset higher fuel costs.
By Agencies |
SYDNEY: Australian flag carrier Qantas said on Thursday that its annual net profit surged 50 per cent to a record $719.4 million as robust passenger demand offset higher fuel costs.
Qantas also announced a billion dollar buy-back of about 10 per cent of its shares, made possible by a cash position of $3.4 billion.
The company said the year-to-June profit figure included a provision of $47 million against a potential fine the airline may incur in the United States for involvement in an alleged freight cartel.
Revenue was up 11 per cent to $15.2 billion. Pretax profit was $1.03 billion, although the net profit was lower than the market's consensus forecast of $766 million.
Qantas, which was the target of a failed $11 billion private equity takeover bid earlier this year, said it expected another major boost in profit in the new financial year.
"The first six weeks of 2007/08 have been very strong for all our flying businesses and forward bookings are equally buoyant through to the end of the calendar year," the company said in a statement.
"As a result, and subject to no major deterioration in market conditions, we are expecting another good profit in 2007/08, which we are currently expecting to be around 30 percent higher than the 2006/07 profit-before-tax result."
Outgoing chairman Margaret Jackson said the share buy-back was expected to start next month.
"The duration of the buy-back will depend on market conditions and any governance issues that may arise during the buy-back," she said.
Chief executive Geoff Dixon noted that "potential new ownership structures" were being considered for the company's various divisions.
The options included the creation of a separate vehicle to finance some or all of the Qantas fleet, as well as potential "partnership or consolidation opportunities" with US, European and Asian airlines.
"We believe we can unlock further value from our individual businesses and work is underway across the company, most notably in our frequent flyer, freight, fleet and holiday divisions," Dixon said.
"We are looking at potential new ownership structures and strategic acquisitions.
"We expect to make announcements during the current financial year on the future direction of these businesses."
Dixon said Qantas' two brand strategy, with Jetstar as a low-cost offshoot, was a key driver of the improved full-year result.
Jetstar realised a pre-tax profit of 112 million in 2006/07 from routes where Qantas previously either lost money or made a very small profit.
Fuel costs remained an enormous challenge for the aviation industry, with costs rising by over $500 million between 2005/06 and 2006/07, Dixon said.
Qantas' fuel bill for the year totalled $3.3 billion, an increase of 19.1 per cent.
He said the airline was also facing increased competition from state-owned Middle East hub carriers, new low cost labour entrants Tiger Airways and Air Asia X, and from Virgin Blue starting trans-Pacific services in 2008.
Qantas declared a final dividend of 15 cents, taking the total for the year to 30 cents per share.
Qantas shares retreated after early gains spurred by news of the buy-back. At 2.35 pm, the stock was down 25 cents or 4.7 per cent at $5.03.
Qantas also announced a billion dollar buy-back of about 10 per cent of its shares, made possible by a cash position of $3.4 billion.
The company said the year-to-June profit figure included a provision of $47 million against a potential fine the airline may incur in the United States for involvement in an alleged freight cartel.
Revenue was up 11 per cent to $15.2 billion. Pretax profit was $1.03 billion, although the net profit was lower than the market's consensus forecast of $766 million.
Qantas, which was the target of a failed $11 billion private equity takeover bid earlier this year, said it expected another major boost in profit in the new financial year.
"The first six weeks of 2007/08 have been very strong for all our flying businesses and forward bookings are equally buoyant through to the end of the calendar year," the company said in a statement.
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"As a result, and subject to no major deterioration in market conditions, we are expecting another good profit in 2007/08, which we are currently expecting to be around 30 percent higher than the 2006/07 profit-before-tax result."
Outgoing chairman Margaret Jackson said the share buy-back was expected to start next month.
"The duration of the buy-back will depend on market conditions and any governance issues that may arise during the buy-back," she said.
Chief executive Geoff Dixon noted that "potential new ownership structures" were being considered for the company's various divisions.
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The options included the creation of a separate vehicle to finance some or all of the Qantas fleet, as well as potential "partnership or consolidation opportunities" with US, European and Asian airlines.
"We believe we can unlock further value from our individual businesses and work is underway across the company, most notably in our frequent flyer, freight, fleet and holiday divisions," Dixon said.
ADVERTISEMENT
"We are looking at potential new ownership structures and strategic acquisitions.
"We expect to make announcements during the current financial year on the future direction of these businesses."
Dixon said Qantas' two brand strategy, with Jetstar as a low-cost offshoot, was a key driver of the improved full-year result.
Jetstar realised a pre-tax profit of 112 million in 2006/07 from routes where Qantas previously either lost money or made a very small profit.
Fuel costs remained an enormous challenge for the aviation industry, with costs rising by over $500 million between 2005/06 and 2006/07, Dixon said.
Qantas' fuel bill for the year totalled $3.3 billion, an increase of 19.1 per cent.
He said the airline was also facing increased competition from state-owned Middle East hub carriers, new low cost labour entrants Tiger Airways and Air Asia X, and from Virgin Blue starting trans-Pacific services in 2008.
Qantas declared a final dividend of 15 cents, taking the total for the year to 30 cents per share.
Qantas shares retreated after early gains spurred by news of the buy-back. At 2.35 pm, the stock was down 25 cents or 4.7 per cent at $5.03.
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