Qantas reports first-half profit as turnaround strategy gathers speed

Australia's Qantas Airways reported its best first-half profit in four years as its cost-cutting programme bore fruit and lower oil prices trimmed fuel expenses.

Qantas said underlying profit before tax, the most closely watched measure, was 367 million Australian dollars, overshooting its own forecast of last December. The result reflects a faster-than-anticipated recovery following last year’s record A$2.8 billion net loss.

"We are meeting or exceeding all our targets as we build a sustainable future for Qantas," chief executive Alan Joyce said in a statement.

All the company’s operating segments were profitable in the six months to December 31st. The troubled international division was profitable for the first time since the global financial crisis, with underlying earnings before interest and tax (EBIT) of A$59 million.

Mr Joyce, who is Irish, said the outlook had improved for the group as a whole for the second half of the year with overall demand stable, a moderation in domestic and international market capacity and stabilising yield and load factors.

Qantas said all operating segments were expected to be profitable for the full year and it plans to increase capacity by 1.5 to 2 per cent in the second half. Full year underlying fuel costs are expected to be capped at A$4 billion.

The airline did not provide a full-year profit forecast, citing a high degree of volatility and uncertainty in global economic conditions, fuel prices and foreign exchange rates.

Qantas had struggled in recent years thanks to high fuel costs, a strong Australian dollar, increasing international competition and a domestic price war with rival Virgin Australia Holdings.

The airline is just one year into a three-and-a-half year turnaround strategy, which includes stripping costs, freezing capacity and slashing 5,000 jobs.

- Reuters