Qantas plans to maintain its Boeing 747-400/400ER fleet at 11 aircraft for the period ahead to take advantage of the growing demand for international air travel and lower fuel prices, as the airline group reported a record profit in the first half of 2015/16.
Statutory Net profit after tax for the six months to December 31 2015 was $688 million, a more than three-fold improvement from the $203 million in the prior corresponding half.
Qantas said in a statement accompanying its financial results two 747-400s that were previously scheduled for retirement by the end of 2015/16 will be retained.
This would help “meet demand requirements in the strong international market as Qantas International transitions to the Boeing 787-9”, Qantas said in a statement.
No timeline was given for when Qantas expected to begin retirement of the 747-400s.
Keeping these two 747-400s, which are primarily used to the United States mainland, Santiago, Johannesburg, Tokyo (Haneda) and Hong Kong, means there will continue to be 11 747s in the Qantas fleet for the period ahead.
In other fleet news, Qantas said it would add three more Fokker 100s to operate on intra-WA routes, replacing some 737-800s that will be deployed on international routes such as increased frequencies on the Perth-Singapore and Brisbane-Christchurch routes.
Qantas also announced it expected to hire 170 new pilots over the next three years, its first significant recruitment of pilots since 2009. During this time, the airline is bringing the first of eight Boeing 787-9 Dreamliners into the fleet.
Underlying profit before tax, which excludes one-off items and was regarded as the best indication of financial performance, came in at $921 million, up from $367 million in the prior corresponding period.
It was the highest first half underlying result in Qantas’s history and at the top end of company guidance issued in December of a result between $875 million and $925 million. It was also a little above the consensus estimates of financial analysts.
“This record result reflects a stronger, leaner, more agile Qantas,” Joyce said.
“Without a focus on revenue, costs and balance sheet strength, today’s result would not have been possible.
“Both globally and domestically, the aviation industry is intensely competitive. That’s why it’s so important that we maintain our cost discipline, invest to grow revenue, and continue innovating with new ventures and technology.”
The airline group said its fuel bill for the half was down $448 million compared with the prior corresponding period as the company benefitted from lower fuel prices and its hedging program.
Qantas said it had realised $261 million in savings in the six months to December 31 2015, bringing to $1.36 billion the total savings achieved as part of the airline’s $2 billion transformation program. A further $189 million in savings was expected in the second half of the current financial year.
While Qantas did not provide financial guidance for the rest of 2015/16, the company did outline some capacity forecasts.
The airline group said it expected to grow capacity in the Australian domestic market about two per cent in the 2015/16 second half.
Qantas’s international operations was tipped to grow capacity nine per cent, while Jetstar’s overseas flying from Australia is likely to increase by 12 per cent to take into account the transition from the A330-200 to the Boeing 787-8.
While no dividend was declared, the Qantas board has approved a share buy-back of up to $500 million due to start in March.
The share buy-back comes on top of Qantas’s $505 million capital return to shareholders in 2015.
“Qantas will continue to assess its capital structure ahead of its full-year results and determine whether and how to distribute surplus capital at that point,” Qantas said.
In terms of the airline’s offering to passengers, Qantas said it would open a new lounge for premium passengers and frequent flyers at London Heathrow Airport in early 2017.
And the airline is also partnering with ViaSat to offer wi-fi on board its domestic fleet, with trials to begin in late 2016.
Joyce said having wi-fi on its domestic services had been “an ambition of ours for a long time”.
“What we’ve been waiting for is the ability to deliver the same speeds in flight that people expect on the ground – and we now have access to the technology to make it happen,” he said.