Qantas Posts 50% Rise in Profit, Plans $820 Million Share Buyback
Qantas Airways, Australia's largest airline, posted a 50% rise in annual earnings as expected on Thursday as passenger demand offset higher fuel costs and announced a A$1 billion (US$820 million) share buyback.
Net profit for the year to June 30 was A$720 million (US$590 million) compared with A$479.5 million a year ago. The result included a A$47 million provision against potential liabilities
from a price-fixing probe, bringing the result roughly in line with analysts' consensus of A$776 million, according to the mean of eight analyst forecasts on Reuters Estimates.
The airline, whose shareholders rejected a $9 billion buyout bid in May, forecast higher profits this year with forward bookings strong and confirmed it was looking at a new ownership structure for its main business units. The buyback was widely expected after being flagged by the company in May.
Soaring appetite for air travel and cost cuts have helped Qantas and other airlines boost profits compared to a year ago, when redundancy costs from a wave of job cuts and soaring fuel bills hurt Qantas' earnings.
"The first six weeks of 2007/08 have been very strong for all our flying businesses and forward bookings are equally buoyant through to the end of the calendar year," Qantas said in a statement, tipping a 30% rise in pre-tax profit this year.
The result was in line with other regional carriers. Shares in Cathay Pacific Airways hit all-time highs last week after it tipped a strong second half, while Singapore Airlines was also upbeat about demand for air travel.
Qantas reiterated it was reviewing the ownership of its frequent flyer program and freight business, and was looking at a separate vehicle to finance some or all of its fleet of aircraft.
The airline, dubbed the Flying Kangaroo, has A$25 billion of new aircraft on order.
Qantas shares had fallen more than 8% in the past two weeks in line with the broader market. Qantas declared a final dividend of 15 cents a share.
A consortium including Macquarie Bank and private equity firm TPG lost a A$5.45 a share offer for the airline in May when key shareholders rejected the bid.