Qantas optimistic despite profit slip

Qantas optimistic despite profit slip

Australian airline Qantas remains cautiously optimistic for the future despite reporting a fall in profits for financial 2010.

The airline – the largest in Australia – reported a net profit of AU$112 million for the 12 months to June, down 4.3 per cent from a year earlier.

Volcanic ash from Iceland – which closed down air travel over Europe earlier this year – was partially held to blame for the fall, alongside the lingering impact of the global recession and lower ticket prices amid competition at home.

Revenue also fell by 5.7 per cent to AU$13.8 billion.

“The airline’s international business improved, despite the impact of the Icelandic volcano on international operations,” explained Qantas chief executive Alan Joyce.

Icelandic ash disruption resulted in lost revenue and additional costs of AU$46 million, he added.

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Business End

Despite the loss, Qantas expects profits for the next six months to be “materially stronger” than a year earlier as demand for leisure travel and premium class seats continues to recover.

“Qantas is one of the few airlines to record successive full-year profits and continues to hold an investment grade credit rating,” continued Mr Joyce.

“The overall strength and diversity of our operations, backed by our two airline brands and portfolio business strategy, and an ongoing focus on cost and prudent financial management, saw us through the crisis and will continue to drive our business.”

Australia was one of a small number of major economies which avoided falling into recession during the global downturn.

Price Fixing

Less positive from a Qantas perspective today was a decision by the Federal Court of Australia overturned a lower court decision to dismiss a price fixing lawsuit involving the airline.

As a result of the decision in Melbourne, Qantas and six other carriers must now defend against claims they participated in a global conspiracy to fix rates for international air cargo shipments.

Also named in the lawsuit are Deutsche Lufthansa, Singapore Airlines, Cathay Pacific, Air New Zealand, Japan Airlines and British Airways.

Auskay International Manufacturing claimed in 2007 the airlines fixed cargo rates from January 2000 to January 2007.