Qantas to raise share capital as profits nosedive

Qantas
has reported a 66 percent plunge in first-half profit as it paid high fuel charges and the financial downturn sent premium passenger numbers tumbling.

The Australian carrier also announced plans to raise at least AU$500 million (US$315 million) in new capital via a share issue to pay off debt and fund new planes.Its after-tax profits were AU$210 million (US$132 million) for the six months to 31 December 2008 compared to AU$618 million a year earlier. This was the worse since the airline’s first loss in 2003 following SARS, September 11 and the Iraq War tearing into earnings.
Revenue rose 2 percent to AU$7.9 billion (US$5 billion).
Qantas reaffirmed its profit before tax forecast of about A$500 million ($315 million) for the 12 months to June 30 this year, and executives said the Sydney-based company was coping well given the economic climate.
“We believe that Qantas is, relative to our peers, in a good position ... one of the few airlines in the world that’s still producing profits,” chief executive Alan Joyce told reporters.
“Numerous airlines have failed over the past year, while many are unable to produce profits and are at risk of becoming unsustainable,” he added.

Qantas Chairman Leigh Clifford said cost-cutting, reduction in capacity and price cuts had prevented a worse result.
Low-cost subsidiary Jetstar turned in better results, with pre-tax profit falling around 48 percent to AU$72 million (US$45 million). Passenger numbers rose almost 14 percent, growing revenue by more than 15 percent to AU$716 million (US$452 million).
Under the capital raising plan, existing shareholders will be able to subscribe for up to AU$10,000 worth of the new shares. The money will be used to reduce debt, diversify funding and support Qantas’ fleet renewal programme, which includes adding four more A380 superjumbos in 2009 to its existing fleet of three.
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