Qantas posts record full-year loss; Shares jump

Struggling Australian airline Qantas posted a FY14 statutory loss after tax of A$2.84 billion ($2.65 billion) on Thursday, the deepest loss in its history as a public company.

But shares in the company jumped 6 percent in early trade, as the airline said it anticipates a rapid improvement in its financial performance and expects to report an underlying pre-tax profit in the first half of the current fiscal year. A clear and significant easing in international and domestic capacity growth will stabilize the operating environment, it added.

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The loss comes after Qantas took a hefty A$2.6 billion writedown due to a restructure that includes re-valuing its fleet. The figure compares with a restated post-tax profit of A$2 million last year and expectations for a bottomline loss that surpassed $1 billion.

On a pre-tax basis Qantas posted a loss of A$646 million, down from a restated profit of A$186 million last year but better than expectations for an underlying loss in excess of $750 million. Revenue and other income stood at A$15.35 billion compared with A$15.9 billion last year.

Ian Waldie | Bloomberg | Getty Images

"There is no doubt that today's numbers are confronting, but they represent the year that is past," CEO Alan Joyce said in a statement. "We have now come through the worst."

Qantas said it does not have plans to spin-off its profit-making loyalty division despite investor calls for major asset sales. Analysts have valued the division at up to A$2.5 billion. However, it said it has identified other potential asset sales including airport terminals, property and land holdings.

"The negative in this result was that Qantas lost nearly half a billion on international and the CFO talked in terms of stripping a billion dollars out of the cost of international. If that's the case, then we are perhaps looking at perhaps a fairly positive turnaround," said Peter Harbison, executive chairman of CAPA - Centre for Aviation.

The results follow Qantas' announcement of a restructuring program earlier this year which included plans to cut 5,000 jobs over three years. The writedown was a result of the company's move to establish a new holding structure that splits the group into four units: Qantas International, Qantas Domestic, Qantas Loyalty and Qantas Freight.

Under current plans Qantas will receive 10 new aircraft in FY15, retire 18 aircraft and return two leases. Its mainline fleet will be reduced to seven different types of aircraft in FY16 from 11 in FY13.

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Qantas has long been dogged by the poor performance in its long-distance business due to high fuel costs, weak demand, stiff competition from rival carriers and a strong Australian dollar.

Its domestic operations also flagged recently, as Australia's slowing economy due to a cooling mining sector took a toll on demand.