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Qantas posts $2.8 billion full year net loss

written by australianaviation.com.au | August 28, 2014
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today's annual results press conference. (Seth Jaworski)
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today’s annual results press conference. (Seth Jaworski)

Qantas’s struggling international operations and weakness in the local domestic market has pushed the airline into the red to the tune of a $2.843 billion full year net loss.

The result for the 12 months to June 30 2014, was much worse than market consensus of an $828 million full year loss, according to a median of five analysts’ estimates compiled by Australian Aviation, largely thanks to Qantas International aircraft valuation write-downs.

Moreover, it was a steep decline from net profit after tax of $5 million in the prior corresponding period. Qantas’s full year results released to the Australian Securities Exchange on Thursday had a “restated” 2012/13 net profit of $1 million.

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Qantas said underlying profit before tax, which the airline regarded as the best indication of its financial performance, fell to a loss of $646 million.

While the result was a little better than market expectations of a $770 million loss, the figure was a massive deterioration from the “restated” underlying profit before tax of $186 million in the prior year.

“The result reflects the very difficult operating environment the group has faced,” Qantas said on Thursday, citing weak demand in Australia, yield declines due to excess capacity and higher fuel costs due to a depreciating Australian dollar.

Qantas said the full year loss included an impairment charge of $2.56 billion on the carrying value of Qantas’s international operations, which will be split into a new holding company following.

PROMOTED CONTENT

“The decision has been made to establish a new holding structure and corporate entity for Qantas International to increase the potential for future external investment, and creates long-term options for Qantas international to participate in partnership and consolidation opportunities,” Qantas said.

There were also write-downs due to the restructure of its fleet ($394 million), redundancies, restructuring and other transformation costs ($428 million).

By segment, Qantas International recorded an underlying EBIT loss of $497 million, Qantas Domestic and EBIT profit of $30 million. Qantas Loyalty remains the group’s standout performer, posting an EBIT profit of $286 million. Jetstar Group made an underlying EBIT loss of $116 million.

Revenue fell three per cent to $15.352 billion, Qantas said.

No dividend was declared.

6 Comments

  • Tony

    says:

    No dividend was declared! Really?!

    Compared to Air New Zealands result yesterday it’s pretty grim and I can’t agree with Allan Joyce’s comment comparing the two airlines result that one of the reasons was a lower exchange rate resulting in higher fuel costs as the NZ$ is lower against the US$ so ANZ they must be paying more for fuel.

    How long can this continue?

  • Bob

    says:

    Ok now its the value of the aircraft being written down bought when the Aust dollar was trading at 68cents . Qantas itself is supposed to be the premium airline but doesn’t receive new planes ,and lets not forget leaving passengers stranded around the world ,an ongoing, seems like a war with employees . Also bad decisions made with start up Asian arms that sound like they were driven by pure ego . You no what would be refreshing and that would be great to see is someone or some people take over the running of Qantas that have a passion for the AIRLINE and also PEOPLE . 🙂

  • random

    says:

    Everyone from management to media needs to be looking at ways to save the Qantas Brand – the old Brand – the great airline with impeccible maintenance, friendly staff, great service, good value, excellent aircraft, loyal customers….. all of the things which seem to have gone missing but will stay that way if the only “press” the airline gets is bad. This is a horrible Catch 22 – how to re-build a brand into an icon when every move it makes cops a hiding. Unfortunately the releases from both management and media have scarcely celebrated the Qantas Brand for the past 3 years.

  • Dr. Francis

    says:

    So the $2 billion write down of the value of air planes is only a “paper loss” according to Joyce. And the delay of a year in purchasing 50 new planes is just a part of a restructure program. We have an ageing fleet, their actual value is now $2 billion less and he is delaying their replacements. Sounds very much like an “Ansett” scenario. Take the Jetstar adventure or is it mis adventure into Japan. Joyce trumpets that they are now the 4th biggest budget airline in the Japanese market. To me 4th means not big enough to set price but small enough to have to follow the leader if they decide to cut prices. Joyce has had plenty of time to perform and my analysis is that this year’s results reflect his poor decision making.

    Enough excuses, enough boastful pronouncements of next year;s wonderful profits. Time for a change at the top

  • Peter

    says:

    Qantas is struggling with their International operations is because they have literally handed many lucrative routes to their opposition, who in their right mind does that ???, for one Emirates have been rubbing their hands together and laughing since the alliance which have not benefited Qantas at all………

  • Mac Carter

    says:

    Qantas will always be in a loss making situation until Senior Management acn re-engage with it”s employees at the coalface.

Leave a Comment

Your email address will not be published. Required fields are marked *

Qantas posts $2.8 billion full year net loss

written by australianaviation.com.au | August 28, 2014
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today's annual results press conference. (Seth Jaworski)
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today’s annual results press conference. (Seth Jaworski)

Qantas’s struggling international operations and weakness in the local domestic market has pushed the airline into the red to the tune of a $2.843 billion full year net loss.

The result for the 12 months to June 30 2014, was much worse than market consensus of an $828 million full year loss, according to a median of five analysts’ estimates compiled by Australian Aviation, largely thanks to Qantas International aircraft valuation write-downs.

Moreover, it was a steep decline from net profit after tax of $5 million in the prior corresponding period. Qantas’s full year results released to the Australian Securities Exchange on Thursday had a “restated” 2012/13 net profit of $1 million.

Advertisement
Advertisement

Qantas said underlying profit before tax, which the airline regarded as the best indication of its financial performance, fell to a loss of $646 million.

While the result was a little better than market expectations of a $770 million loss, the figure was a massive deterioration from the “restated” underlying profit before tax of $186 million in the prior year.

“The result reflects the very difficult operating environment the group has faced,” Qantas said on Thursday, citing weak demand in Australia, yield declines due to excess capacity and higher fuel costs due to a depreciating Australian dollar.

Qantas said the full year loss included an impairment charge of $2.56 billion on the carrying value of Qantas’s international operations, which will be split into a new holding company following.

PROMOTED CONTENT

“The decision has been made to establish a new holding structure and corporate entity for Qantas International to increase the potential for future external investment, and creates long-term options for Qantas international to participate in partnership and consolidation opportunities,” Qantas said.

There were also write-downs due to the restructure of its fleet ($394 million), redundancies, restructuring and other transformation costs ($428 million).

By segment, Qantas International recorded an underlying EBIT loss of $497 million, Qantas Domestic and EBIT profit of $30 million. Qantas Loyalty remains the group’s standout performer, posting an EBIT profit of $286 million. Jetstar Group made an underlying EBIT loss of $116 million.

Revenue fell three per cent to $15.352 billion, Qantas said.

No dividend was declared.

6 Comments

  • Tony

    says:

    No dividend was declared! Really?!

    Compared to Air New Zealands result yesterday it’s pretty grim and I can’t agree with Allan Joyce’s comment comparing the two airlines result that one of the reasons was a lower exchange rate resulting in higher fuel costs as the NZ$ is lower against the US$ so ANZ they must be paying more for fuel.

    How long can this continue?

  • Bob

    says:

    Ok now its the value of the aircraft being written down bought when the Aust dollar was trading at 68cents . Qantas itself is supposed to be the premium airline but doesn’t receive new planes ,and lets not forget leaving passengers stranded around the world ,an ongoing, seems like a war with employees . Also bad decisions made with start up Asian arms that sound like they were driven by pure ego . You no what would be refreshing and that would be great to see is someone or some people take over the running of Qantas that have a passion for the AIRLINE and also PEOPLE . 🙂

  • random

    says:

    Everyone from management to media needs to be looking at ways to save the Qantas Brand – the old Brand – the great airline with impeccible maintenance, friendly staff, great service, good value, excellent aircraft, loyal customers….. all of the things which seem to have gone missing but will stay that way if the only “press” the airline gets is bad. This is a horrible Catch 22 – how to re-build a brand into an icon when every move it makes cops a hiding. Unfortunately the releases from both management and media have scarcely celebrated the Qantas Brand for the past 3 years.

  • Dr. Francis

    says:

    So the $2 billion write down of the value of air planes is only a “paper loss” according to Joyce. And the delay of a year in purchasing 50 new planes is just a part of a restructure program. We have an ageing fleet, their actual value is now $2 billion less and he is delaying their replacements. Sounds very much like an “Ansett” scenario. Take the Jetstar adventure or is it mis adventure into Japan. Joyce trumpets that they are now the 4th biggest budget airline in the Japanese market. To me 4th means not big enough to set price but small enough to have to follow the leader if they decide to cut prices. Joyce has had plenty of time to perform and my analysis is that this year’s results reflect his poor decision making.

    Enough excuses, enough boastful pronouncements of next year;s wonderful profits. Time for a change at the top

  • Peter

    says:

    Qantas is struggling with their International operations is because they have literally handed many lucrative routes to their opposition, who in their right mind does that ???, for one Emirates have been rubbing their hands together and laughing since the alliance which have not benefited Qantas at all………

  • Mac Carter

    says:

    Qantas will always be in a loss making situation until Senior Management acn re-engage with it”s employees at the coalface.

Leave a Comment

Your email address will not be published. Required fields are marked *

Qantas posts $2.8 billion full year net loss

written by australianaviation.com.au | August 28, 2014
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today's annual results press conference. (Seth Jaworski)
Qantas Group CFO Gareth Evans (left) and CEO Alan Joyce at today’s annual results press conference. (Seth Jaworski)

Qantas’s struggling international operations and weakness in the local domestic market has pushed the airline into the red to the tune of a $2.843 billion full year net loss.

The result for the 12 months to June 30 2014, was much worse than market consensus of an $828 million full year loss, according to a median of five analysts’ estimates compiled by Australian Aviation, largely thanks to Qantas International aircraft valuation write-downs.

Moreover, it was a steep decline from net profit after tax of $5 million in the prior corresponding period. Qantas’s full year results released to the Australian Securities Exchange on Thursday had a “restated” 2012/13 net profit of $1 million.

Advertisement
Advertisement

Qantas said underlying profit before tax, which the airline regarded as the best indication of its financial performance, fell to a loss of $646 million.

While the result was a little better than market expectations of a $770 million loss, the figure was a massive deterioration from the “restated” underlying profit before tax of $186 million in the prior year.

“The result reflects the very difficult operating environment the group has faced,” Qantas said on Thursday, citing weak demand in Australia, yield declines due to excess capacity and higher fuel costs due to a depreciating Australian dollar.

Qantas said the full year loss included an impairment charge of $2.56 billion on the carrying value of Qantas’s international operations, which will be split into a new holding company following.

PROMOTED CONTENT

“The decision has been made to establish a new holding structure and corporate entity for Qantas International to increase the potential for future external investment, and creates long-term options for Qantas international to participate in partnership and consolidation opportunities,” Qantas said.

There were also write-downs due to the restructure of its fleet ($394 million), redundancies, restructuring and other transformation costs ($428 million).

By segment, Qantas International recorded an underlying EBIT loss of $497 million, Qantas Domestic and EBIT profit of $30 million. Qantas Loyalty remains the group’s standout performer, posting an EBIT profit of $286 million. Jetstar Group made an underlying EBIT loss of $116 million.

Revenue fell three per cent to $15.352 billion, Qantas said.

No dividend was declared.

6 Comments

  • Tony

    says:

    No dividend was declared! Really?!

    Compared to Air New Zealands result yesterday it’s pretty grim and I can’t agree with Allan Joyce’s comment comparing the two airlines result that one of the reasons was a lower exchange rate resulting in higher fuel costs as the NZ$ is lower against the US$ so ANZ they must be paying more for fuel.

    How long can this continue?

  • Bob

    says:

    Ok now its the value of the aircraft being written down bought when the Aust dollar was trading at 68cents . Qantas itself is supposed to be the premium airline but doesn’t receive new planes ,and lets not forget leaving passengers stranded around the world ,an ongoing, seems like a war with employees . Also bad decisions made with start up Asian arms that sound like they were driven by pure ego . You no what would be refreshing and that would be great to see is someone or some people take over the running of Qantas that have a passion for the AIRLINE and also PEOPLE . 🙂

  • random

    says:

    Everyone from management to media needs to be looking at ways to save the Qantas Brand – the old Brand – the great airline with impeccible maintenance, friendly staff, great service, good value, excellent aircraft, loyal customers….. all of the things which seem to have gone missing but will stay that way if the only “press” the airline gets is bad. This is a horrible Catch 22 – how to re-build a brand into an icon when every move it makes cops a hiding. Unfortunately the releases from both management and media have scarcely celebrated the Qantas Brand for the past 3 years.

  • Dr. Francis

    says:

    So the $2 billion write down of the value of air planes is only a “paper loss” according to Joyce. And the delay of a year in purchasing 50 new planes is just a part of a restructure program. We have an ageing fleet, their actual value is now $2 billion less and he is delaying their replacements. Sounds very much like an “Ansett” scenario. Take the Jetstar adventure or is it mis adventure into Japan. Joyce trumpets that they are now the 4th biggest budget airline in the Japanese market. To me 4th means not big enough to set price but small enough to have to follow the leader if they decide to cut prices. Joyce has had plenty of time to perform and my analysis is that this year’s results reflect his poor decision making.

    Enough excuses, enough boastful pronouncements of next year;s wonderful profits. Time for a change at the top

  • Peter

    says:

    Qantas is struggling with their International operations is because they have literally handed many lucrative routes to their opposition, who in their right mind does that ???, for one Emirates have been rubbing their hands together and laughing since the alliance which have not benefited Qantas at all………

  • Mac Carter

    says:

    Qantas will always be in a loss making situation until Senior Management acn re-engage with it”s employees at the coalface.

Leave a Comment

Your email address will not be published. Required fields are marked *

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