Qantas warns on potential losses

7th Jun 2012
Qantas warns on potential losses

The Qantas Group has said it expects to report an underlying profit before tax in the range of $50-$100 million for the financial year ending June 30th 2012, buoyed by domestic earnings.

However, Qantas International is expected to report an earnings before interest and tax loss of over $450 million in 2011/12 compared with $216 million in 2010/11.

In the domestic market, both Qantas and Jetstar will deliver improved results compared to the previous year and combined the two flying brands will deliver an EBIT of over $600 million.

This strong result is despite industrial action, record fuel costs and aggressive competitor capacity increases.

As a result of the weakening revenue environment, group yield for the second half of 2011/12 is expected to increase by 0.5 per cent to one per cent which is down on the previous estimate of 1.5 per cent to 2.5 per cent.

Also included in the 2011/12 forecast is the impact of declining bond yields since mid-March 2012, which has had an adverse non-cash effect of approximately $50 million on certain provisions.

Group underlying fuel costs are expected to reach $4.4 billion, an increase of approximately $700 million on the prior year.

Qantas Group CEO Alan Joyce said this tough and worsening environment reinforced the importance of the Qantas International five-year transformation plan announced in August 2011.

“While there are one-off costs associated with the transformation program – in the range of $370-$380 million for the full year 2011/12 more than half of which are non-cash items – these costs will be outweighed by the long-term benefits of increased efficiency and competitiveness,” concluded Joyce.


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