Qantas Airways reports a loss of $2.843 billion
Sydney : Qantas Airways reported a loss of $2.843 billion for the year to 30 June 2014, far from the flag carrier’s $1 million profit a year ago.
The airline reported the record loss on the back of huge writedowns on its international fleet and restructuring costs despite remaining optimistic, previously declaring it was aiming to return to underlying profitability in the first half of fiscal 2015.
The loss reflects the costs associated with the airline’s $2 billion transformation program that includes redundancies and early aircraft retirement in addition to a non-cash write-down of $2.6 billion to the value of the Qantas International fleet.
Qantas stated the deterioration in earnings was driven by a decline in revenue, with both yield and passenger loads lower due to capacity growth running ahead of demand in domestic and international markets.
Qantas chief executive Alan Joyce labelled the massive loss as “confronting” however reflective of the year that is past.
Saying the airline had now “come through the worst,” Joyce was positive about the accelerated Qantas transformation program in which he believes the airline is “already emerging as a leaner, more focused and more sustainable Qantas group.”
Despite much speculation, Joyce confirmed Qantas has ruled out selling or floating its profitable frequent flyer business, Qantas Loyalty, in order to fund its turnaround.
“After careful consideration, our judgment was that Qantas Loyalty continued to offer major profitable growth opportunities, and there was insufficient justification for a partial sale,” Joyce said.
Meanwhile the battle for domestic air capacity between Qantas and rival Virgin Holdings seems to have come at a sizeable financial cost. Qantas announced it will pull back and will add no new capacity in the first three months of the 2014/15 financial year.
The national carrier also decided to separate its domestic and international arms, creating a new corporate entity for the Qantas International.
Source : Australia News
August 28, 2014
