Qantas profit falls, dividend scrapped

The way they treat their passengers and cut corners on maintenance, it's no wonder

QANTAS Airways has posted a 4.3 per cent fall in annual net profit to $112 million but says conditions are improving. Net profit at Qantas (qan.ASX:Quote,News) for the year to June 30 is down from $117 million in the previous corresponding period.

Underlying pre-tax profit for the year was $377 million, within its guidance of between $300 million and $400 million. That compares to an underlying pre-tax profit of $100 million in the previous corresponding period.

No final dividend will be paid, and the resumption of dividend payments will depend on trading results, market conditions and the level of capital expenditure commitments, Qantas said.

Chief executive Alan Joyce said if present conditions continue, the airline's first half underlying pre-tax profit for 2010/11 may be "materially stronger" than the first half of 2009/10. However, changes in fuel prices, currency exchange rates and general trading conditions could rapidly impact earnings, he warned.

"It is therefore not possible to provide a more specific forecast at this time given the volatility and uncertainty of the aviation market," Mr Joyce said.

Qantas expects to increase its capacity in the first half of 2010/11 by 9.6 per cent compared to the previous corresponding period as conditions improve, he said. "International demand and yield across the business and leisure sectors continue to improve and domestic business demand is also strengthening," Mr Joyce said.

"The domestic leisure market continues to be highly competitive. "However we expect this too will improve in the first half of the year." All business segments were profitable in the year to June, Mr Joyce said.

Qantas earnings before interest and tax (EBIT) were $67 million, up from $4 million in the previous corresponding period. Jetstar's EBIT was $131 million, up from $107 million in the previous corresponding period.

Qantas Frequent Flyer EBIT was $328 million, up from $226 million in the previous corresponding period.

Qantas Freight EBIT was $42 million, up from $7 million in the previous corresponding period.

The Jetset Travelworld Group EBIT was $14 million, down from $16 million in the previous corresponding period.

Passenger yields were down 7.2 per cent on the previous year, due to initiatives aimed at stimulating demand, but they were improving off their lows and business travel was recovering, Qantas said.

SOURCE