Qantas Airways’ annual profit surged 50% to a record $587 million, despite a 19% hike in its annual fuel bill because of higher oil prices.
Qantas revenue for the fiscal year ending June 30, rose 11% to $12.4 billion, whereas its pretax profit mounts to $841 million, in line with market expectations.
Qantas’s robust strong balance sheet has vindicated shareholders decision of rejected $9bn takeover offer from buy-out group TPG and Australia’s Macquarie Bank. Qantas shares also gained investors confidence as it also steadfastly traded above the A$5.45 takeover offering price.
Buoyant with the yearly profit, Australia-based airline is hoping another good session as for the current year, it expects pre-tax profits to rise 30% based on buoyant conditions in the international travel market.
In the line with the overwhelming profit, Qantas Airway will embark on a program to buy back up to 10% of its shares on the open market, which could cost more than $0.83m.
However for the future, strategy might get some changes as soaring fuel costs remain an enormous challenge for the aviation industry. Airline is also facing stiff competition from the other airline too - state-owned Middle Eastern carriers, new low cost entrants Tiger Airways and Air Asia X, can bite its profit as they all has same routes. Qantas most lucrative route is between Australia and the US, where it will compete with Virgin Blue.
Airline was on the verge of merger, but shareholders shown their confidence on board and parent company and voted against the proposal. To avoid such facelift in the future and protect shareholders rights and its independent entity, airline is looking for new ownership structure for its main business units and also eying at low cost carriers. Initially Qantas is looking at separating its freight and logistics operations, which would focus on growth in Australia and Asia, and evaluating alternatives for creating a separate vehicle to finance some or all of the Qantas’s aircraft fleet. Airline is also planning to add more aircraft as it will make new order within the next two months.
Via: Stuff
