Qantas Airways Ltd shares yesterday dropped the most in almost five months on concern that rising fuel prices and costs would erode earnings, even after the Australian airline reported record annual profit.
The fuel bill — among the biggest expenses for any airline — would probably jump 21 percent this financial year, the carrier said.
Wages and aircraft leases would also become more onerous, it said, stoking concern a run of record earnings could falter.
Shares fell 2.8 percent in Sydney, after tumbling as much as 7.7 percent earlier. The biggest loss since March 2 trimmed the stock’s gains this year to 30 percent.
Brent crude, which has doubled to about US$75 a barrel from a January 2016 low, is casting a shadow over Qantas’ outlook, after chief executive officer Alan Joyce restored the carrier to profit with his cost-cutting turnaround plan.
He has rewarded investors with share buybacks and dividends over the past three years, and the stock is still the best performer this year among global airlines.
With profit at a record, the airline pledged to return as much as A$500 million ($365 million) to shareholders, including a higher-than-expected dividend and another stock buyback, it said in a statement.
Underlying pretax profit in the 12 months ended June rose 14 percent to a record A$1.6 billion, the top of Qantas’ own forecast.
However, investors were spooked by the fuel bill.
The airline said its total cost on kerosene is expected to increase by about A$690 million to A$3.92 billion in the year through June next year.
It is confident it can “substantially recover” that larger fuel bill, based partly on forward bookings, Qantas said.
Qantas should be able to “more than cover” higher fuel costs in the domestic market, where the airline dominates smaller rival Virgin Australia Holdings Ltd, Joyce told reporters.
He did not match that pledge for the more competitive international market, saying only that Qantas would “substantially recover” the higher cost of fuel on those routes.
He is also upgrading his fleet with more fuel-efficient aircraft and redirecting international capacity toward Asia to tap a travel and tourist boom.
The carrier has ordered six additional Boeing Co 787-9 aircraft, the first of which are to be delivered before the end of next year, taking its Dreamliner fleet to 14 by 2020.
“We don’t see anything that’s indicating to us that our strong cash flows won’t continue into the future,” Joyce said on Bloomberg Television, when asked whether Qantas might be better off stockpiling money for tougher times.
Just a few years ago, the millennial generation — generally defined as those born from the early 1980s through the mid-1990s — was synonymous with youthful rebellion. However, now, as the millennials ease into early middle age, they are finding their path out of their parents’ basement to be a lot harder than it was for earlier generations. The fundamental problem is that millennials are not building wealth. The wealth of the median US household headed by someone 35 or younger has actually shrunk in inflation-adjusted terms since the mid-2000s, even as the wealth of older Americans has continued to grow. An
‘LITTLE CHOICE’: The airline said it expected only about 8,000 of its 29,000 employees to be working by next month, but hoped to have 21,000 in the next two years Qantas Airways Ltd plans to cut at least 6,000 jobs and keep 15,000 more workers on extended furloughs as Australia’s largest airline tries to survive the coronavirus pandemic. Qantas yesterday announced a plan to reduce costs by billions of dollars and raise fresh capital. The plan includes grounding 100 planes for a year or more and immediately retiring its six remaining Boeing Co 747 planes. Chief executive Alan Joyce said the airline has to become smaller as it braces for several years of much lower revenues. He said the furloughed workers faced a long interruption to their airline careers. “The actions that we’re taking
Apple Inc’s decision to stop using Intel Corp processors in its Mac computers and switching to its own chips might benefit Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) and boost Taiwan’s high-tech exports, Australia and New Zealand Banking Group (ANZ) said in a note on Tuesday. The US tech giant announced the “Apple silicon” initiative at its annual Worldwide Developers’ Conference, which started on Monday. The company said the first Mac powered by its own chips would debut by the end of this year and all product lines might shift to the new architecture in the next two years. TSMC is likely to
EXPERIMENTAL DRUG: While news about a COVID-19 vaccine is more eye-catching, developing a treatment would be more viable, the Senhwa boss said Senhwa Biosciences Inc (生華科) aims to raise NT$1.5 billion (US$50.57 million) by issuing 15 million new common shares in the third quarter of this year to fund the research of new drugs, including the experimental drug Silmitasertib for the treatment of COVID-19, the company said on Monday. That would be the firm’s largest fundraising effort after it raised more than NT$1.4 billion from an initial public offering on the Taipei Exchange (TPEX) in April 2017, chief financial officer Sarah Chang (張小萍) told the Taipei Times by telephone. The price of the new shares would depend on the firm’s average share price