HIGHLIGHTS
* Profit before tax of $502.3 million
* Revenue of $11.4 billion
* Final dividend of 9 cents per share fully franked, taking total fully franked dividends for the year to 17 cents per share
* Earnings per share of 20.0 cents per share

Qantas today announced a profit before tax of $502.3 million for the year ended 30 June 2003.

The net profit after tax was $343.5 million.

The Directors declared a fully franked final dividend of 9 cents per share, bringing the total fully franked dividends for the year to 17 cents per share.

The Chairman of Qantas, Margaret Jackson, said the result was pleasing given the negative circumstances existing in the airline industry.

“The fallout from 9/11, constant security alerts, acts of terrorism, the war in Iraq and the SARS pandemic have all affected both inbound and outbound travel,” Ms Jackson said.

“The constant pressure on the industry has made planning extremely difficult.
“It is a tribute to all our staff and to our management that the company performed so well in those circumstances.”
The Chief Executive Officer of Qantas, Geoff Dixon, said the lead-up and outbreak of the war in Iraq and SARS had combined to decimate the airline`s profitability in the second half.
“After a record first half we saw all sections of our business come under severe strain in the second half, with inbound visitors to Australia falling by more than 20 per cent in some months and by up to 45 per cent on some Asian routes,” he said.
This particularly impacted:
* Qantas domestic operations, where 15 per cent of all passengers come from inbound services; and
* The key international markets of Japan, Hong Kong, Singapore, Bangkok, the United Kingdom and Europe.

Mr Dixon said Qantas had acted quickly following the war and the outbreak of SARS to:
* reduce planned international flying by up to 20 per cent from April 2003;
* use accumulated leave to reduce staffing numbers by the equivalent of 2,500 full time employees between April and 30 June 2003 and by 1,000 between July and September 2003;
* implement a restructuring program involving 2,000 redundancies, 800 positions eliminated through attrition as well as hundreds of permanent positions being converted from full time to part time;
* freeze capital and discretionary expenditure;
* retire some older aircraft and defer delivery of some new aircraft;
* introduce a program to reduce planned capital expenditure in the 2003/04 financial year by $1 billion.

Mr Dixon said other issues that affected the second half result included increased competition and falling yields in the domestic business and a yield decline internationally as pricing was used to stimulate travel after the fear of SARS began to recede.

The introduction of a new fares package domestically from 1 July and a growing return of the inbound market had stabilised domestic yields and international yields were recovering as the “SARS recovery” fares leave the market.

Mr Dixon said the initiatives in response to the SARS outbreak had resulted in a one-off charge of $91 million for the write down of the 767-200 fleet, which would be retired by the end of the 2003/04 year, and were the major reason for the redundancy charge of $115 million.

He said the airline industry was still recovering from the “constant shocks” of the past two years.

The hard work on costs and product over a sustained period, and new strategies underway or to be implemented, provided the platform for Qantas to transition back to satisfactory levels of profitability over the next two to three years while re-equipping its fleet with modern, cost efficient aircraft.

The new initiatives included:
* a program called Sustainable Future that aims to reduce operating costs by $1 billion over two years;
* significant investment in the international airline product, including new airport lounges and new seating and interiors in all international aircraft (see separate release);
* investment in, and changes to, the domestic airline that will provide better product, service and reliability, greater sales on the internet and a wider range of choice for passengers (see separate release);
* a further $6 billion investment over three years in new and more efficient aircraft;
* further growth of Australian Airlines into leisure markets where Qantas cannot attract satisfactory yields; and
* the introduction of a new business model that will see Qantas run stand-alone businesses for flying, airports, maintenance, freight, catering, Qantas Holidays and Qantas Defence Services (see separate release).
Mr Dixon said the need to continually make Qantas more efficient was the backbone of the Sustainable Future program.
“We intend to work closely with our people and all Unions, including the ACTU, to ensure we reduce costs and improve productivity,” Mr Dixon said.
“Although this will not be easy and will certainly involve some difficulties, we are confident that it can be achieved in a constructive manner.” MORE DETAILS AT www.qantas.com.au
——-