Australian flag carrier Qantas Airways yesterday warned its full-year profit could dive by up to 90 percent on the back of steep losses in its international arm, sending its share price plunging to all-time lows.
The airline said it expected underlying profit before tax — its preferred measure of financial performance — to be between A$50 million and A$100 million (US$49 million and US$98 million) in the year to June 30, compared with A$552 million in the previous year.
In a statement to the stock market, the carrier blamed worsening global operating conditions driven by the European economic crisis and its highest-ever fuel bill.
A soaring Australian dollar and a bitter battle with unions over wages and conditions that saw chief executive Alan Joyce ground the entire fleet for 48 hours in October last year also cost the airline dearly.
The warning saw the embattled company’s shares plunge nearly 20 percent to a record low of A$1.140 before closing down 18.6 percent at A$1.155, on a day when the overall market ended higher.
Qantas’ international business is expected to post a loss of more than A$450 million, more than double the loss of A$216 million in the last fiscal year.
In contrast, its far healthier domestic unit and low-cost offshoot, Jetstar, are expected to book a profit exceeding A$600 million.
“We remain focused on returning Qantas international to profitability in 2014 and for Qantas international and domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011,” Joyce said.
In a bid to halt the dramatic earnings slide, Joyce last month announced Qantas would split its international arm from its domestic operations.
The move came days after Joyce said 500 jobs would be axed in Qantas’ heavy-maintenance and engineering operations. Joyce said the restructuring program was expected to incur costs of up to A$380 million to the fiscal year ending on June 30, but would result in more than A$300 million in annual benefits once in place.