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Qantas profits rise Four-fold despite Jumbo grounding

Qantas profits rise Four-fold despite Jumbo grounding

Qantas has shrugged off a series of safety problems with its fleet of A380s to post a four-fold increase half-yearly profits.

Improved corporate and leisure bookings lifted the Australian flag carrier’s net profits to A$241m, up $183 million from $58 million on the previous December.

Qantas put revenues lost due to the grounding of its A380 passenger fleet, after an engine exploded near Singapore last year, at $55 million, a figure it expected to rise to $80 million by the end of the year.

Alan Joyce, Qantas chief executive, said: “Qantas has delivered a strong result and is, again, one of the few airlines to remain consistently profitable and continue to hold an investment grade credit rating.”

Joyce said his airline was still in talks with Rolls-Royce about reaching a compensation settlement but would not rule out pursuing the UK engine manufacturer through the courts.

“The London and US markets would have made money if we hadn’t grounded our A380 fleet. Qantas is keeping its options open ... including legal options,” he said.

But Joyce also maintained a cautious outlook for long-haul operations, saying it was not performing at levels the business expected. He noted that A380s cost $300 million each, so required the business to make good returns.

“Even if these markets made a small profit, even then it would not be good enough because we are spending so much money on fleet replacement,” he said.

Ticket sales rose 9.9 percent to $7.59 billion - a $682 million increase. Underlying profit before tax - the company’s preferred measure of financial performance - rose 56 per cent to $418.5 million.

Like all carriers, Qantas has been hit by rising oil prices. It estimated fuel costs would increase to about A$2bn in the second half. It is using fuel hedging, fuel surcharges and higher passenger fares to “limit the impact on the bottom line”.

Qantas did not declare an interim dividend.