Qantas posts 4% drop in full-year net profit

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Qantas Airways has reported a 4% fall in its full year net profits to A$112 million ($100 million), although Australia's flag carrier expects to benefit from the continuing recovery in the industry going forward.

Revenues fell 4% to A$13.8 billion for the fiscal year to 30 June, while expenses fell 7% to A$13.3 billion, says the group. Profits before tax, which do not take into account non-recurring items, grew more than three-fold to A$377 million from A$100 million a year ago, it adds.

The "strong performances" across the group underpinned the results, with all major businesses remaining profitable, says Qantas CEO Alan Joyce.

Full-service carrier Qantas Airways' earnings before interest and tax (EBIT) surged to A$67 million from A$4 million a year ago.

"The airline's international business also improved, despite the impact of the Icelandic volcano on international operations, which resulted in lost revenue and additional costs of A$46 million," says Joyce.

Low-cost subsidiary Jetstar posted a 22% growth in underlying EBIT to A$131 million, while Singapore-based associate Jetstar Asia earned S$6.9 million ($5 million), adds Qantas. Jetstar has been profitable every year since its launch in 2004, adds Joyce.

Qantas Freight reported a five-fold increase in underlying EBIT to A$42 million from A$7 million a year ago, while Qantas Frequent Flyer posted a 45% growth in underlying EBIT to A$328 million.

The Group's overall traffic grew during the six months, with RPKs up 2% and total passenger numbers rising 8% to 41.4 million. Capacity, as measured in ASKs, inched up 0.1%. The passenger load factor rose 1.2 percentage points to 80.8%.

For the year ended 30 June, the group added 23 new aircraft to its fleet and retired nine for a total fleet size of 254 aircraft. It expects to take delivery of about 160 aircraft over the next 10 years, including 14 more Airbus A380s and 50 Boeing 787s. The first 787s will be delivered to Jetstar in mid-2012.

Qantas expects its underlying pre-tax profit for the first half of its current financial year, which ends 31 December, to be stronger than a year ago.

"The group expects to increase capacity in the first half of FY11 by 9.6% compared to the first half of FY10, whilst retaining flexibility to optimise growth. Domestic business and total international revenue is expected to improve, while domestic leisure continues to be highly competitive," it adds.

It cautions, however, that changes in fuel prices and foreign currency exchange rates could "rapidly impact earnings".

"It is therefore not possible to provide a more specific forecast at this time given the volatility and uncertainty of the aviation market," says Qantas.