iscover
Qantas plans to maintain its Boeing 747-400/400ER fleet at 11 aircraft for the period ahead to take advantage of the growing demand for international air travel and lower fuel prices, as the airline group reported a record profit in the first half of 2015/16.
Statutory Net profit after tax for the six months to December 31 2015 was $688 million, a more than three-fold improvement from the $203 million in the prior corresponding half.
Qantas said in a statement accompanying its financial results two 747-400s that were previously scheduled for retirement by the end of 2015/16 will be retained.
This would help “meet demand requirements in the strong international market as Qantas International transitions to the Boeing 787-9”, Qantas said in a statement.
No timeline was given for when Qantas expected to begin retirement of the 747-400s.
Keeping these two 747-400s, which are primarily used to the United States mainland, Santiago, Johannesburg, Tokyo (Haneda) and Hong Kong, means there will continue to be 11 747s in the Qantas fleet for the period ahead.
In other fleet news, Qantas said it would add three more Fokker 100s to operate on intra-WA routes, replacing some 737-800s that will be deployed on international routes such as increased frequencies on the Perth-Singapore and Brisbane-Christchurch routes.
Qantas also announced it expected to hire 170 new pilots over the next three years, its first significant recruitment of pilots since 2009. During this time, the airline is bringing the first of eight Boeing 787-9 Dreamliners into the fleet.
Underlying profit before tax, which excludes one-off items and was regarded as the best indication of financial performance, came in at $921 million, up from $367 million in the prior corresponding period.
It was the highest first half underlying result in Qantas’s history and at the top end of company guidance issued in December of a result between $875 million and $925 million. It was also a little above the consensus estimates of financial analysts.
“This record result reflects a stronger, leaner, more agile Qantas,” Joyce said.
“Without a focus on revenue, costs and balance sheet strength, today’s result would not have been possible.
“Both globally and domestically, the aviation industry is intensely competitive. That’s why it’s so important that we maintain our cost discipline, invest to grow revenue, and continue innovating with new ventures and technology.”
The airline group said its fuel bill for the half was down $448 million compared with the prior corresponding period as the company benefitted from lower fuel prices and its hedging program.
Qantas said it had realised $261 million in savings in the six months to December 31 2015, bringing to $1.36 billion the total savings achieved as part of the airline’s $2 billion transformation program. A further $189 million in savings was expected in the second half of the current financial year.
While Qantas did not provide financial guidance for the rest of 2015/16, the company did outline some capacity forecasts.
The airline group said it expected to grow capacity in the Australian domestic market about two per cent in the 2015/16 second half.
Qantas’s international operations was tipped to grow capacity nine per cent, while Jetstar’s overseas flying from Australia is likely to increase by 12 per cent to take into account the transition from the A330-200 to the Boeing 787-8.
While no dividend was declared, the Qantas board has approved a share buy-back of up to $500 million due to start in March.
The share buy-back comes on top of Qantas’s $505 million capital return to shareholders in 2015.
“Qantas will continue to assess its capital structure ahead of its full-year results and determine whether and how to distribute surplus capital at that point,” Qantas said.
In terms of the airline’s offering to passengers, Qantas said it would open a new lounge for premium passengers and frequent flyers at London Heathrow Airport in early 2017.
And the airline is also partnering with ViaSat to offer wi-fi on board its domestic fleet, with trials to begin in late 2016.
Joyce said having wi-fi on its domestic services had been “an ambition of ours for a long time”.
“What we’ve been waiting for is the ability to deliver the same speeds in flight that people expect on the ground – and we now have access to the technology to make it happen,” he said.
adammudhen
says:Great news, looks like between low fuel prices and Joyce’s plan, things are coming together. Great news about the 747s too, anything that keeps them flying longer is good news to me.
John
says:Without the fuel price drop Joyce and more importantly Qantas would have been stuffed. With the amount of jobs he cut for no gain he deserves no praise what so ever in this country.
Christopher Campbell
says:John what you say is completely untrue of course the lower fuel it has helped Qantas but the facts stand that if it was only the lower fuel price that certainly would not be making the same kind of profits.
Raphael
says:Its funny how 4 years ago or so everyone was hating on Joyce telling him to quit saying qantas will collapse if he didn’t, now look at where they are, i give Alan a round of applause
Steve
says:If the Jet fuel price was the same as two years ago, they would still be making a loss…
PAT
says:@Christopher, @John
I think John makes good point, The figures provided here support it, if they are true
quote:
“Net profit before tax for the six months to December 31 2015 was $688 million, a more than three-fold improvement from the $203 million in the prior corresponding half.”
So that’s $485 million improvement.
quote:
“The airline group said its fuel bill for the half was down $448 million compared with the prior corresponding period…”
The “total savings achieved as part of the airline’s $2 billion transformation program” and mkes “(Joyce said,) .. a stronger, leaner, more agile Qantas,” contributes:
$(485-448=) $41 million.
(which some part probabily come from the lowering service and food&drink you received in flight .)
With hundreds of people loose their job and livelihood.
Tell me why he should be praised.
Warwick
says:Can someone please get a comment from Nick Xenophon on this result please!
An ambulance chaser Lawyer turned career politician who thinks he can tell the business world how to operate.
http://www.smh.com.au/business/aviation/sack-alan-joyce-and-qantas-board-says-nick-xenophon-20131205-2yspj.html
Bob
says:Joyce didn’t go far enough cutting jobs. On my flight last week from Jakarta the cabin crew were really past their retirement date. Flying 747s is a fun experience but being served by a cranky old grandpa is not.
Craigy
says:The reduced fuel costs did contribute to the profit but you can’t just subtract the saved fule costs from the profit. So commnts about Qantas being stuffed without the fuel savings is just a nonesense.
Interesting comparison between Virgin and Qantas half year results. Qantas domestic profit was $387m (although its not clear if Qantaslink was included as it’s results are not cited) and Virgin was $62.5m. With a domestic fleet about the same size as Qantas, it suggests that there are perhaps big issues at Virgin.
John
says:Having flown from Sydney to ..Heathrow via Dubai and return to Sydney last week,it was the first time since 2000 that I had flown with Qantas, Now I know why I prefer an Asian or a UAE airline,as the service was second rate. Had to ask for a coffee,a drink,and the toilets left a lot to be desired! No wonder they have made a terrific profit if they cut back on the small stuff.
Raymond
says:Interesting how things can pretty much turn full circle. Not long ago Virgin was smelling of roses and Qantas was the big bad wolf. Now Qantas is making great strides and it appears that Virgin has issues…
Scott
says:Didn’t think or would take long for Craigy to post negative comments about virgin it’s becoming as common as the sun coming up.
Neil Hansford
says:As a constant advocate that Qantas should have accelerated the retirement of the 747 fleet whilst fuel remains in its current range Qantas has the advantage of a fleet of low capital cost/low debt servicing high capacity aircraft to be able to match and expand capacity very competitively.Just imagine how good this result would have been if the right decision had been taken in the Dixon era and Qantas had taken up the red hot deal for a fleet of 777’s. Joyce can’t be blamed for the poor decisions of his predecessors- he just lives with their poor judgement.
Let’s not all forget that if you add the profits of ANZ, SQ, VA and Etihad together they don’t equal this Qantas result.
Qantas staff should be kissing his feet as he has delivered their 5% bonus for wage freeze and they still have a secure job going forward
Aussieflyer
says:Great news as well with the announcement of almost 200 new pilots to be recruited. Good news for the guys and gals in GA, hopefully this will kick off a surge of movement across the industry.
john doutch
says:Well QF, damned if you do, and damned if you don’t (according to the armchair CEO’s). Results speak for itself. The aviation world is cyclical, it is on the up at the moment, and QF is making the most of it. AND there is an irishman in this country who has had a big say in it. Well done Alan Joyce, and the team at QF. It dosen’t get much better than this.
G.S.
says:Its just ‘good luck’ that the price of oil has helped Qantas with this record profit. Its no thanks to Joyce. He is still a liability on Qantas along with the entire Board. As for the A380 and the 747, I would take a 747 any day.
The A380 is a liability on Qantas as it is NON-PROFITABLE on any sectors where they have to fly longer than 12 hours; a fact that most people don’t realise. Yes as a previous comment made, Qantas should have purchased the Boeing 777-300ER instead of the A380 a fact that in time will make the International Section of Qantas unprofitable once again. I would take Dixon over Joyce any day. Again the oil price is Qantas’s saving grace, NOT Joyce.
Christopher Campbell
says:Couldn’t agree with you more john doutch
Gary
says:G.S. – for goodness sake grow up. Yes the reduced oil price did assist QF in this profit result; however, IT DID NOT CREATE THE PROFIT! QF would still have been in profit nonetheless. Whilst Joyce’s delivery in making changes in QF could have been much, much better, he has returned QF to profit. Yes aviation is cyclical, but when you take over a company that has been poorly run for some time you need to make hard decision to save it for all.
Keigo namba
says:Yap of course profits…. with the expenese shutdown of maintenance base in melbourne 2 yrs ago and loss of jobs to enginnering staff and offshore the maintenace if B747 heavy check to Hong kong…allan joyce can say…cos profit in his pocket…but loss to family finances in melbourne .
Christopher Campbell
says:what rubbish GS. Grow up Alan Joyce hater
James from Sydney
says:I’m looking towards the future when oil prices go up. I hope AJ and his team keep working on controlling costs. They can very easily get out of control.
GS
says:Gary, you have not a clue what you are on about. You have obviously never worked for Qantas. Qantas is a fantastic company; all it needs is to have a CEO and a New Board to keep it that way and make better choices of aircraft looking forward. I repeat once more, the drop in crude oil prices has made Qantas profitable and nothing else, especially Joyce. If you notice its not posting any dividend, a sign that things are all not good as the picture being painted. The share holders like myself are asking many questions; along with the Australian Government; WHY NO DIVIDEND with such a high profit????????????????
Gary
says:GS. Mate, whilst I have never worked for QANTAS, I blindly fly QF on every trip I do whether business or pleasure. That is over 20 trips per year. As I said before, Joyce’s delivery has been found wanting; however, nearly every major legacy carrier has undergone a period of pain to remain viable – UA, AA, BA, JL have all undergone heavy downsizing – the list goes on, let’s not forget our Kiwi friends who bailed out their flag carrier. QF was found wanting when it came to competition on the world stage, and had to heavily reduce the workforce. I do indeed feel sorry for those that lost their jobs; however, that is the airline industry and was the pain to endure to have QF remain viable, If not there would not be a QF in 2016. Any blind freddy would appreciate that the reduction in oil proces contributed to the profit, BUT IT WAS NOT THE ONLY FACTOR. As I said, Joyce’s delivery was nowhere near perfect and contributed greatly to the angst and stress to the majority of the QF workforce. We could go on and on re the B777; however, Joyce is implementing a good choice with the B789 and maybe the B778/9 in the future. I sincerely hope the workforce continues to support where QF is going, never look behind always ahead.
Christopher Campbell
says:Well said Gary, your totally right!
GS
says:Both Gary and Christopher have got their points, but as I have repeated many times and politicians and especially the Qantas workforce itself will only confirm what I have said. Qantas will in the future find itself in hard times once again, through a number of factors. 1) If the price of oil rises again; which it will inevitable do. 2) The wrong choice of aircraft are purchased; e.g. more A380’s. (yes the 787-9 is the correct choice). 3) As the world sinks more into conflict and Australia finds itself isolated, the lack of Qantas staff left to maintain the Qantas fleet will not satisfy the needs; in other words not being able to outsource the maintenance overseas, to such places as China, where a lot of maintenance in done on Qantas Aircraft will impact on its operations. Maybe instead of just blindly supporting Joyce and the Board you both could look at the total picture and as they say ‘stop looking in mirrors’ as the present definitely doesn’t represent the future.
Christopher Campbell
says:The maintenance is not done in China, GS. Any way the amount of 787s that QF will buy in the future to replace A330s/B747s should be definitely enough to do heavy maintence for the international and domestic fleet.
ButFli
says:Maybe they could refresh the cabins in these old birds. Last week I was on one of the two that were meant to be retired and the old Mk1 Skybeds are a joke.
Aden O'Keefe-Buckton
says:wonderful, hopefully thy’ll be around a long while more. 🙂
GS
says:Sorry Christopher, but yes a lot of maintenance is done in China, which by the way includes Hong Kong.
Murray
says:The 787-9 is not the solution – designed for 8 across seating, Qantas plans to cram in 9. Sardine city. The 777, and particularly the 777-300ER was always the aircraft Qantas needed
Christopher Campbell
says:GS, Only the 747s are maintained in Hong Kong out of the Qantas fleet.