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.
ADVANCED: Previously, Taiwanese chip companies were restricted from building overseas fabs with technology less than two generations behind domestic factories Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp, would no longer be restricted from investing in next-generation 2-nanometer chip production in the US, the Ministry of Economic Affairs said yesterday. However, the ministry added that the world’s biggest contract chipmaker would not be making any reckless decisions, given the weight of its up to US$30 billion investment. To safeguard Taiwan’s chip technology advantages, the government has barred local chipmakers from making chips using more advanced technologies at their overseas factories, in China particularly. Chipmakers were previously only allowed to produce chips using less advanced technologies, specifically
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
TARIFF SURGE: The strong performance could be attributed to the growing artificial intelligence device market and mass orders ahead of potential US tariffs, analysts said The combined revenue of companies listed on the Taiwan Stock Exchange and the Taipei Exchange for the whole of last year totaled NT$44.66 trillion (US$1.35 trillion), up 12.8 percent year-on-year and hit a record high, data compiled by investment consulting firm CMoney showed on Saturday. The result came after listed firms reported a 23.92 percent annual increase in combined revenue for last month at NT$4.1 trillion, the second-highest for the month of December on record, and posted a 15.63 percent rise in combined revenue for the December quarter at NT$12.25 billion, the highest quarterly figure ever, the data showed. Analysts attributed the
RSS