Qantas CEO: Cheap fuel to bring even better H2

Qantas Airways' blockbuster first-half results are just the beginning, according to CEO Alan Joyce who hinted on Thursday of an even brighter outlook ahead as the impact of lower oil prices finally kicks in.

"We believe our fuel bill will be less than A$4 billion [from A$4.5 billion in the first-half] based on current fuel prices, so there should be a substantial benefit from fuel in the second-half," Joyce told CNBC on Thursday, nothing that the impact of cheaper fuel didn't come through in the first-half.

Australia's financial year starts on July 1st. For the July-December period of 2014, or first-half, Qantas posted underlying profit before tax of A$367 million, its first profit in four years and a dramatic improvement from a A$252 million loss a year earlier.

Joyce also expects a A$375 million benefit from the airline's cost-cutting Transformation Program; without it, he said the airline would have surely produced a loss in the first-half.

"We believe all of the segments, including Qantas International, which hasn't made money since the global financial crisis, will be profitable this half, but we're not going to give any outlook statement for the overall group profitability," Joyce said.

A report from UBS last month indicated that the Australian flagship carrier could post A$1 billion dollars in underlying pretax profit this financial year, and A$1.7 billion the following year.

Transformation is the future

Now a year old, the airline's turnaround plan involves cutting over 5,000 jobs and reducing costs by at least $2 billion.

"Our focus now for the second half and for the next two years is completing that Transformation Program, it is critical to be able to get Qantas to cope with headwinds if they were to occur: increasing fuel prices, the U.S. dollar going back up," Joyce stated.

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The aim of the three-year program is to ensure Qantas can not only capitalize on good times while tailwinds are present, but also be able to give good returns when headwinds return, the Irish-born businessman explained.

Worries remain

Joyce flagged Australia's vulnerable business environment as a concern going forward, largely due to mixed demand.

"We do have some segments of the market that are suffering: the resource sector in particular has cut back. Consumer confidence isn't great and business confidence is being impacted by the political situation," he said.

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Furthermore, the carrier failed to announce a dividend or share buyback despite returning to a profit. Still, investors didn't appear too concerned; Qantas shares soared as much as 6 percent on Thursday.

"I don't think there's any expectation for either at the moment. The company needs to get its balance sheet in order first and it may potentially announce dividends in a few years' time," said Sam Dobson, director and senior analyst at Macquarie.

Not everyone is as optimistic, however. Joe Magyer, senior analyst at the Motley Fool, remains bearish on the stock: "In the super long run, airlines have terrible returns on assets and investments. If you zoom out and look at a 10 or 15 year chart of companies [like Qantas], you can see their share prices do poorly compared to the overall market."