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Qantas to pay dividend after delivering record profit

written by australianaviation.com.au | August 24, 2016

Qantas will deliver a dividend to shareholders for the first time since 2009 after reporting a near doubling of full year net profit in 2015/16 to more than $1 billion.

The airline group said net profit after tax for the 12 months to June 30 2016 came in at $1.03 billion, up 84.7 per cent from $557 million in the prior corresponding period. It was the largest profit in the airline’s history.

The result was a little below market expectations of a $1.11 billion result, according to a median of 10 analysts forecasts obtained by Australian Aviation.

Revenue rose 2.4 per cent to $16.2 billion, Qantas said in a regulatory filing to the Australian Securities Exchange on Wednesday.

Qantas chief executive Alan Joyce said the company will pay a seven cents per share fully franked final ordinary dividend to shareholders, equalling about $134 million.


A $366 million share buy-back has also been proposed, subject to shareholder approval.

Although shareholders had not received a dividend since 2009, Qantas returned $1 billion to shareholders in 2015/16, which comprised of a $505 million capital return in the first half of 2015/16 and a $500 million share buyback that was concluded in mid June.

Meanwhile, underlying profit before tax (PBT), which removes one-off items and is regarded as the best indication of financial performance, came in at $1.53 billion, up from a reported $975 million in the prior year.

Again, the figure was marginally below market expectations of $1.58 billion underlying PBT.

Joyce said the transformation plan, which aims to reduce costs and improve operating efficiencies in the business through higher aircraft utilisation, staff cuts and other measures, has been crucial in delivering the lift in profit.

“Our transformation plan is paying dividends for our shareholders, our customers and our employees,” Joyce said in a statement.

“Transformation has made us a more agile business, created value for our shareholders and given us a platform to invest for the future.”

Qantas said its $2 billion cost reduction target by June 2017 for the transformation plan had been lifted to $2.1 billion.

All Qantas’s operating segments bar Qantas Freight reported a lift in underlying earnings before interest and tax (EBIT).

Qantas said its total fuel bill for 2015/16 was $3.2 billion, down $664 million from the prior year. And it expected underlying fuel costs to be “no more than $3.2 billion” in the current year.

Qantas Domestic lifted underlying EBIT 20 per cent to $578 million despite a two per cent decline in revenue, while Qantas International posted a near doubling of underlying EBIT to $512 million, from $267 million in the prior corresponding period.

Underlying EBIT at the Jetstar group of airlines rose 97 per cent to $452 million, Qantas said, with Jetstar Japan delivering a maiden full year profit and Jetstar Asia lifting its profit result compared with the prior year.

Qantas Loyalty had a 9.8 per cent improvement in underlying EBIT at $346 million.

However, Qantas Freight suffered a 44 per cent drop in underlying EBIT to $64 million, which the company said reflected flat cargo demand amid a six per cent increase in global cargo capacity.

In terms of the outlook, Joyce said the domestic and international markets were “still mixed” given ongoing softness in the resources sector.

The company declined to provide profit guidance for 2016/17, with Joyce noting oil prices, current movements and the global economy all remained volatile.

“The Qantas Group expects to continue its strong financial performance in the first half of financial year 2017, in a more competitive revenue environment,” Joyce said.

“We are focused on preserving high operating margins through the delivery of the Qantas transformation program, careful capacity management, and the benefit of low fuel prices locked in through our hedging.”

To that end, Qantas has guided the market to domestic capacity across its Qantas and Jetstar brands contracting one per cent in the first half of 2016/17, while international capacity across the airline group was forecast to grow about four per cent.

“Unit revenue is expected to be below the first half of financial year 2016, with competitive industry pricing and resources sector weakness.”

“This will be offset by a total unit cost improvement from the Qantas transformation program and lower fuel costs.”

In terms of the fleet, Qantas said tickets for its 787-9 services would go on sale before Christmas. The flights would be initially on Qantas’s “existing network”, Joyce said.

“And shortly after that, we’ll be announcing other international destinations that this state-of-the-art aircraft will fly to,” Joyce said.

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Comments (12)

  • Oskar C


    Brisbane to new US routes would be nice with B787-9

  • Richard DC


    You can pay your pilots more now too hey Joyce? Or is that asking too much? I guess they’re only pilots hey, easy job that you could do yourself Joycie?

    There’s a reason it’s a boring environment at work…

  • Craigy


    A good result given the high level of competition at the moment.

    So the B789 will start on the existing network. My guess is YSSY-KSFO or introduction of weekly services YSSY-CYVR. That would release a couple of B744s for retirement or allocated to new routes or replacing A330s to Asia.

  • Shawn


    Its a massive turn around after they went cap in hand to the government wanting a bail out not that long ago The union movement are nowhere to be seen after trying to destroy this Australian icon. Hope qantas continued to flourish.

  • Pirate


    SO……. when you have a year for negotiating pay, you A) ground the fleet without notice causing untold heartache to your passengers and B) Massively Depreciate a few A380’s to make it look like you didn’t have any money anyway……… then once all the new EBAs are squared away you have a year without depreciating anything to produce a profit that a CEO can base his bonus on. An absolutely disgusting amount of money for one person to earn, for tweaking the books without actually EARNING the company any more money at all……. not 1 cent more than reduced fuel costs made……. Genius really……

  • Dale


    @pirate, you might know something about airplanes, but you clearly know nothing about operating a publicly listed company in Australia.

  • John


    @Dale the suspicions of how Joycie is manipulating situations to suit his agenda are not isolated. Maybe you can explain the massive loss-profit pendulum swing, because many in the industry are struggling!!!!

  • That Ron guy


    Pirate’s argument has merit. As for managing a publicly listed company, that sounds exactly like how you do it!

  • Craigy


    Well John, firstly, it was well known that the value placed on the Qantas fleet was inflated. The right down in Fleet value was an adjustment that needed to happen. The actual loss in the 14/15 was only a few million dollars. Who in industry is struggling to understand?

    Qantas has suffered like all established full service airlines. A cost base that is unable to compete with newer airlines, due to outdated work practices and strong unions stopping changes and management without the strength to force change. The airline can’t survive when the cost per seat mile exceeds revenue per seat mile.

    The change in financial performance is built on staff productivity, the savings within the business and to some extent lower fuel costs. Management will always try to manipulate events for the business. Grounding the airline because a few unions were inflicting a slow death by a thousand cuts was the right thing to do. Increasing wages now because of the profits should be resisted. Containing costs is the only way Qantas will remain profitable, employ people and invest in product.

  • Richard DC


    Craigy, you sound like your in management, spoken like a true bean-counter! Unfortunately that’s all they can do, count the beans! So when they retire and enter back into the real world, which friends will they have? Just the few they helped in management and that’s it. Hope it’s worth having a bad social life and retirement with no friends, just to save the company a few extra pennies…. And not that the company cares about you anyway even though you’re in management..

  • Craigy


    Richard DC Far from the truth I am not in airline management but have studied it. Sorry but you sound like one very sour individual.

  • Vannus


    Ver happy for all concerned with marvellous ‘turnaround’ financially!
    Believe it to be the biggest in the Australian Corporate world, EVER!

    Looking forward to QANTAS’ Centenary, in 2020.
    Not bad for a little mail carrier company founded in outback Q’l’d………..
    Sir Hudson Fysh, Fergus McMaster, & P.J. McGinness would be proud!

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