Qantas has posted an underlying profit before tax of A$1.4 billion ($1.1 billion) for its 2017 financial year ended 30 June, down 8.5% from a year earlier, but still the second highest result in the carrier's history.
Qantas Group revenue fell 0.9% to A$16.1 billion, according to its results statement. Net passenger revenue fell 1%, with international competition and the ramping up of new routes outweighing better unit revenue at the company's domestic businesses. Consequently, RASK fell 2%.
Expenses fell marginally to A$14.4 billion; CASK including fuel fell 1% to A$7.00.
While the carrier benefited from lower fuel costs and efficiency measures in its transformation plan, this was offset by greater over fuel consumption from additional flying.
Net profit fell 17.1% to A$853 million. As of 30 June, cash and cash equivalents stood at A$1.78 billion, compared with A$1.98 billion on 30 June 2016.
Domestically, earnings before interest and tax (EBIT) rose A$67 million to A$645 million.
"Careful capacity management, cost control, and yield management helped drive this record result, with unit revenue up 3% and margins of 11.5%," says Qantas of its domestic business.
"The business market strengthened in the second half, while the impact of the resources sector decline on the group slowed to A$55 million in FY2017 compared to a decline of A$120 million in FY2016."
EBIT at Qantas International fell 36% to A$327 million. Qantas attributed the decline to 8.5% capacity growth in the broader market, which reduced unit revenue by 6.5%. The carrier adds that cost controls mean that its international margins dropped from 8.9% to 5.7%, but that this is still better than competitors.
The Jetstar Group's EBIT fell $35 million to A$417 million, with both domestic and international operations performing well. Qantas freight saw EBIT fall A$17 million to A$47 million owing to market weakness stemming from increased widebody aircraft capacity. Domestic freight, however, was stable.
"These results market the completion of our three-year turnaround program – the ambitious A$2 billion initiative we started in 2014 to make the Qantas Group sustainably profitable," says chief executive Alan Joyce.
"In that time, we've tackled some difficult structural issues, became a lot more efficient and kept improving the customer experience. It's fair to say those efforts have well-and-truly paid off."