Qantas says that it expects its underlying profit before tax for the financial year ending June 30 to come in at $50-$100 million as a result of lower yields and higher fuel costs.
Qantas said that it expects yield during the six months to June 30 to grow by 0.5-1.0 per cent, compared with previous estimates of 1.5-2.5 per cent, while underlying fuel costs are expected to rise by $700 million to $4.4 billion.
Qantas says that it is expecting Qantas International’s earnings before interest and tax (EBIT) loss for the year to blow out to $450 million, compared to a $216 million loss the year prior.
“Structural issues in the business have been compounded by the impact of global economic factors – including increased fuel costs, the high Australian dollar and weakness in the UK and Europe market – as well as the $100 million one-off cost of industrial action,” the company said.
By comparison, it expects its domestic Qantas and Jetstar businesses to deliver positive EBIT of over $600 million.
“We remain focused on returning Qantas International to profitability in 2014 and for Qantas International and Domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011,” said CEO Alan Joyce.
The announcement had an immediate effect on Qantas shares, which slumped by 16 per cent, taking it for the first time ever to below $1.20 per share on June 5.