Australia’s Qantas posts record annual profit, announces share buyback

A Qantas A380 aircraft takes off from Sydney International Airport above Botany Bay, in Australia, August 2017. (Reuters pic)

QUEENSLAND: Australia’s Qantas Airways Ltd announced a A$332 million stock buyback program on Thursday after posting a record annual underlying profit, bolstered by a rise in domestic revenue as it cut capacity and raised fares.

The airline’s underlying pre-tax profit, its most closely watched measure, rose to US$1.17 billion (A$1.60 billion) for the 12 months ended June 30 from A$1.40 billion a year earlier.

That was largely in line with an average estimate of A$1.61 billion from nine analysts, according to Thomson Reuters.

Qantas had in May forecast pre-tax profit, excluding exceptional items, of between A$1.55 billion and A$1.60 billion.

The airline, which controls nearly two-thirds of the domestic capacity in Australia, said domestic earnings rose 19% during the year ended June 30.

“The overall value for the travelling public remains extremely strong, with domestic sale fares almost 40% lower in real terms than they were fifteen years ago,” Chief Executive Alan Joyce said in a statement.

Joyce also said that the company was seeing healthy demand across key sectors matched by improving levels of capacity discipline, which was a positive sign for the year ahead.

Under Joyce’s reign, Australia’s flagship carrier has executed a successful turnaround that has cut costs and allowed it to return cash to shareholders, helping to push the airline’s shares to record highs.

Airlines globally are under financial pressure as a result of higher fuel prices.

Qantas said it expected its fuel bill to rise by about A$690 million in the 2019 fiscal year. It said it expected to “substantially recover” the higher fuel costs, however, on the back of strong forward bookings and a continued focus on transformation.

The airline plans to launch the world’s longest non-stop commercial flight, from Sydney to London, by 2022 after starting Perth-London flights in March. Qantas in June named former Wesfarmers CEO Richard Goyder as its new chairman, replacing Leigh Clifford who will retire in October after being at the helm for 11 years.