Embattled carrier Qantas yesterday said it had turned the corner after a major shake-up to stem losses, forecasting a swing back into the black in its half-year profit guidance, which sent its shares soaring.
Record fuel costs and fierce competition saw the Australian carrier post an underlying loss before tax — its preferred measure of financial performance — of A$252 million (US$209 million) in the six months to Dec. 31 last year.
However, in a market update, Qantas said it expected an underlying profit of between A$300 million and A$350 million in the same six months this year.
The company gave no guidance on a net profit basis, but the news propelled its share price to its highest in almost four years, surging 13.8 percent to close at A$2.39.
Qantas chief executive officer Alan Joyce said the upbeat numbers were driven by tumbling oil prices and a cost-cutting campaign, with the firm embarking on a A$2 billion transformation program 12 months ago.
“Today, we confirm that Qantas is set to report its best first half result since 2010,” Joyce said. “This demonstrates that the strategy we have outlined to transform our business is working.”
“This is an improvement of over A$550 million compared with the first half last year, with Qantas Transformation being the primary driver of the turnaround,” he added.
The firm, which is due to report its interim result on Feb. 26, said all areas of the business, including its ailing international division, were expected to be profitable in the first half of the fiscal year.
It comes on the heels of a cost-cutting drive that has seen thousands of jobs axed, aircraft deliveries deferred and growth at Asian offshoot Jetstar frozen.
The carrier has also benefited from lower jet fuel prices, which are expected to add A$30 million to the bottom line during the six-month period.
Morningstar analyst Daniel Mueller said Qantas was enjoying strong market momentum.
“I think the market tends to follow the momentum; when things are going well the share price goes up,” he said.
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