Australia's Qantas Airways has reported a 72% drop in profits after tax for its fiscal half year, with the economic downturn of the first quarter only partially offset by the recovery seen in the global airline industry towards the end of 2009.
The carrier made A$58 million ($52 million) for the six months to 31 December, down A$152 million from the A$210 in profits after tax that it reported a year before.
Sales and other income fell by 14% to A$6.9 billion, but the carrier also managed to reduce expenditure to A$6.8 billion from A$7.8 billion during the six months. Profit before tax fell to A$90 million, down from A$288 million a year before.
"While the operating environment has been unprecedented and challenging, this result reflects the strength and diversity of our operations," says Qantas CEO Alan Joyce.
"The global economic crisis, and its impact on demand, revenues and yields, required airlines to take decisive action. Qantas' response was quick but carefully considered, and the tough decisions made last year, particularly in terms of capacity management and cost initiatives have yielded results."
The carrier's Q future cost reduction programme, which was announced in August 2009, is helping the carrier to deliver its results and helping in its future financial and operational performance, he adds.
"Q Future is already delivering significant benefits and efficiencies," says Joyce. "We are well placed to deliver the 2009/2010 target of A$500 million in benefits, with more than A$200 million in sustainable savings and efficiencies achieved to date."
All of the Qantas Group's main businesses made a profit.
The flagship full-service carrier Qantas Airways reported earnings before interest and tax of A$60 million, down A$38 million from the A$98 million that it made a year before. This was due to "significant declines in yield as well as the impact of lower capacity".
The company, however, reaffirmed its commitment to the model and announced a plan to refurbish its Boeing 747-400 fleet to reduce the number of first class seats, but increase the number of business class and premium economy seats as part of what it believes is a change in the market after the financial crisis.
Jetstar, its low-cost subsidiary, continues to be the stellar performer in the Group with a 181% increase in EBIT to A$121 million. This came as the carrier's revenues increased by 18.1% to A$1.1 billion on the back of a 33% rise in operating capacity. Passengers carried by Jetstar increased by 43% to 7.3 million.
Qantas Freight's EBIT was A$17 million, down A$32 million from a year before. However, A$16 million of this was due to the strengthening Australian dollar. "The remainder reflected the downturn in the airfreight market that began in November 2008. These conditions continued through the current half-year."
Qantas Frequent Flyer's EBIT increased by A$84 million to A$157 million, continuing to deliver strong profits to the Group.
Looking ahead Qantas projects a profit before tax of A$300-$400 million for the year to 30 June. But the company still sees continued uncertainty in volatile fuel prices, industry capacity and passenger and freight demand.