Australian flag carrier Qantas Airways Ltd yesterday posted a record annual net loss of A$2.84 billion (US$2.65 billion), but chief executive officer Alan Joyce insisted clearer skies lie ahead after aggressively cutting costs.
The worse-than-expected result compared with the wafer-thin profit posted in the previous year, with one-off restructuring and redundancy payouts hammering the bottom line.
However, the biggest hit came from a A$2.6 billion non-cash writedown of the value of its ageing international fleet, largely due to the historic cost of aircraft purchased at a much lower Australian dollar exchange rate.
Photo: Bloomberg
Qantas’ underlying loss before tax in the 12 months to June 30 — its preferred measure of financial performance, which excludes one-off costs and writedowns — was A$646 million, slightly better than forecast.
Analysts had been expecting a net loss of up to A$1 billion as the carrier also battles high fuel costs and fierce competition from subsidized rivals.
Qantas announced in February it was cutting 5,000 jobs, deferring aircraft deliveries, freezing growth at its Asian offshoot Jetstar and cutting routes in a bid to turn around its fortunes.
Joyce said the worst was now over.
“There is no doubt today’s numbers are confronting, but they represent the year that is past,” he said. “We have now come through the worst... We expect a rapid improvement in the group’s financial performance — and a return to underlying profit before tax in the first half of FY15, subject to factors outside our control.”
Qantas, whose main domestic rival Virgin Australia is majority-owned by state-backed Singapore Airlines, Air New Zealand and Etihad, has regularly complained that the 1992 Qantas Sales Act restricts its access to capital.
The act caps foreign ownership at 49 percent and last month the government agreed to relax the restrictions.
While the 49 percent cap remains, the change means a single foreign investor or foreign airline can boost their holding to a maximum of 49 percent, an increase from the previous limit of 25 percent.
As a result Qantas said it would create a new unit for its international division, effectively separating it from the domestic arm — allowing it to increase the potential for future investment.
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