Qantas has posted recorded annual profits of AU$1,408m, representing a 46 per cent increase on the previous year. Despite the hugely impressive set of figures, which also showed revenue of AU$16.2bn, its Chief Executive Officer Geoff Dixon warned that the airline had begun to see the effects of a slowing economy and rising fuel prices in its fourth quarter.“The rapid rise in fuel costs since December last year is unprecedented and the impact has been felt across the aviation industry and the world economy. At current prices our fuel expense will be over $1.6 billion higher in 2008/09. We have hedged 81 per cent of our crude oil price exposure at a worst case all-in cost of US$118 a barrel. This cover is all in options, which will allow Qantas to benefit if prices fall,” he said.

“The strategies we have worked hard to implement over the past few years, including the successful two brand strategy, the segmentation of our business and the continued focus on costs through the Sustainable Future Programme, have put us in a strong position to deal with the current challenges.”

Dixon said the key drivers of the results were:

* Strong domestic and international demand, which led to a 1.2 per cent yield improvement and a 0.8 per cent improvement in seat factor to 80.7 per cent for the Group;

* the continued success of the group’s two brand strategy, with Qantas Airlines delivering a 21.6 per cent increase in profitability, and continued growth by Jetstar in both international and domestic markets, leading to a profit increase of $37 million, or 44.7 per cent, compared to the previous year;

* improved margin management, with operating expenditure increasing only 5.6 per cent, compared to capacity growth of 4.0 per cent and CPI increases of 3.4 per cent;

* a further $747 million of efficiencies under the Sustainable Future Program, which resulted in a unit cost reduction of 2.3 per cent.

“We have benefited from a strong revenue environment, which was supported by major investments in customer service and product. The result was further underpinned by sustained efforts to improve efficiency,” he said.

He also touched upon the QF30 decompression incident and the questions over Qantas safety. “This event, coupled with the impact of the recent industrial dispute with the Australian Licensed Aircraft Engineers Association, caused significant disruption for our passengers and impacted Qantas’ financial and operating performance in recent months.

“We understand the level of scrutiny we are being subjected to at present. We will work through these issues and implement any changes that may be required, but our commitment to safety should never be questioned. Qantas has an unrivalled safety record, and safety will always remain our number one priority.”
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