Qantas to focus on debt reduction

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Qantas Group says it will focus on debt reduction after its net debt increased by 8% in the fiscal year 2011/12, when 37 aircraft were introduced to its fleet.

For the 12 months to 30 June, Qantas's capital expenditure (capex) totalled A$2.3 billion ($2.41 million). Net debt reached A$3.56 billion, compared with A$2.97 billion in the previous fiscal year.

Qantas generated A$1.81 billion net cash from operating activities, up from A$1.78 billion in fiscal 2010/11. The group used A$2.28 billion net cash in investing activities, down from A$2.47 billion the year before.

The group acquired 37 aircraft during the fiscal year - 34 new deliveries and three aircraft acquired under finance lease. It retired 14 aircraft from its fleet, including six Boeing 747-400s for which it booked a A$147 million loss.

Qantas used A$370 million of cash for financing activities, compared with A$508 million in fiscal 2010/11.

Cash at the end of June totalled A$3.4 billion compared with A$3.5 billion at 30 June 2011. In addition, Qantas has a A$300 million undrawn standby facility. Going forward, the group says it aims to reduce its debt with use of surplus liquidity as debt matures.

Qantas closed financing on two Airbus A380s with ECA guaranteed loans. Its new 737-800 fleet was financed with a mixture of Japanese operating lease structures (five aircraft); commercial bank debt (five aircraft); and cash from the group's balance sheet (three aircraft, in addition to seven A320s for subsidiary Jetstar).

The group forecasts A$1.9 billion capex in fiscal 2012/13. Qantas plans to continue accessing a variety of funding sources, including ECA loans, commercial bank debt, structured lease products and internal cash, the company says.

Up to 10 narrowbody aircraft will be added in the 12-months period to 30 June 2013.