Qantas posts $203m half-year net profit in massive turnaround
Qantas has flown clear of its recent losses to post a first-half profit of $203 million, boosted by cut-price fuel and continuing cost cutting.
Today's result was in stark contrast to the record full-year loss of $2.8 billion posted by Qantas for the 2013–2014 financial year, following a $235 million half-year loss for the six months to December 2013.
Investors quickly rewarded the result, with Qantas shares jumping 6.8 per cent in early trade on the ASX.
By 10:30am (AEDT) those gains had been pared to a rise of 3.9 per cent, taking Qantas stocks to $2.92 in comparison to the record low of 95 cents they hit in December 2013.
Underlying earnings, which strip out one-off items, came in at $367 million for the six months to December – beating market expectations of a $350m profit.
The turnaround has been driven by cost savings from a $2 billion transformation program, lower fuel prices, and stronger returns in Qantas' domestic and international businesses.
The program aims to cut costs, freeze capacity and remove 5,000 jobs.
Qantas is forecasting total benefits from the restructuring will reach $875 million by the end of June, 16 months into the three-year program.
"The decisive factor in our best half-year result for four years was our complete focus on the Qantas transformation program," Qantas chief executive Alan Joyce said.
"Our financial position is significantly stronger because of the actions we've taken, and we are giving Qantas a solid foundation for growth in earnings."
UBS estimates Qantas could save $1.4 billion on its fuel bill this financial year, assuming a jet fuel price of $US70 a barrel.
Qantas says all operating segments were profitable during the half year.
The international division returned to profitability for the first time since the global financial crisis, posting underlying earnings of $59 million, compared to a loss of $321 million in the prior year.
Domestic earnings also grew from $57 million in the December 2013 half year to $227 million for the six months to December 2014.
Qantas said it also saved $59 million from the removal of the carbon tax.
The airline did not provide full-year profit guidance, citing the high degree of volatility in economic conditions, fuel prices, and foreign exchange rates.
However, the company said overall demand was stable, while demand was mixed in the domestic market, and market capacity was moderating both in Australia and internationally.
Despite the improved result, Qantas decided to not pay an interim dividend.
