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Qantas 1H pre-tax profit up 56% to A$417 million

The Qantas Group saw first half profits before tax jump 56% to A$417 million ($417 million) in the six months to 31 December, but reports an uneven recovery between domestic and international operations.

Qantas Airways' underlying earnings before tax were A$165 million, up sharply from $60 million a year earlier, says the carrier. Unit Jetstar's earnings before tax were $143m, including SG$17 million from Jetstar Asia. The Qantas Frequent Flyer programme generated pre tax profits of A$189 million, and its freight operations $41 million.

"This would have been significantly better if it wasn't for the grounding of the A380s," says chief executive Alan Joyce.

Qantas's A380 operations were disrupted after a Qantas A380 suffered an uncontained engine failure in November, resulting in lost revenue and other incremental costs. Qantas forecasts a further $25m impact in the second half of the year. The carrier is currently in discussions with Rolls-Royce for a commercial settlement.

The Group reports that average yields increased 7% over the previous year, but only domestic yields have returned to their pre financial crisis levels, says chief financial officer Gareth Evans.

Recovery in business travel drove domestic yield improvements.

Domestic yields are now 30% higher than competitors, Evans says. He expects further yield growth.

Although Qantas says that all airlines within the group are profitable, Joyce declined to breakout the profitability of Qantas's international operations.

Earlier this month Joyce warned that Qantas's international division was "falling significantly short of where we should be." Joyce says Qantas is losing market share as excess capacity enters Australia predominantly from China and the Middle East.

He affirmed today a recently-established "task force" will evaluate international operations "to get that business into a position where we will grow it again."

"We are very keen on growing the international business. We believe that's important for the group in the longer-term, but that business needs a focus," Joyce says.

Qantas announced aircraft acquisitions for its domestic business and for Jetstar owing to strong performance in those markets.

Qantas expects this year's annual results to be better than higher than last year's before tax profit of $377 million.

The carrier expects its full year fuel bill to grow by $2 billion, but plans to offset this with fuel hedges and fuel surcharges. It also hopes to benefit from the strong Australian dollar. Qantas expects to incur costs up to $55 million owing to recent floods in Queensland and up to $15 million due to Cyclone Yasi in North Queensland.

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