Qantas: Alan Joyce flags $350 million profit for July-December

Qantas: Alan Joyce flags $350 million profit for July-December

Qantas expects to record a $300-350 million profit for the six months from July to December, CEO Alan Joyce revealed today, with all divisions of the airline – including its beleaguered international arm – tracking back into the black.

The pretax underlying profit would be Qantas' strongest performance in the second half of the calendar year (first half of the financial year) since 2010.

The result is largely driven by Qantas' cost-cutting and efficiency drive and bolstered by increased passengers and revenue following a cease-fire in the 'capacity war' between Qantas and Virgin Australia, along with the falling cost of jet fuel.

The transformation program alone is expected to return $350 million in cost savings in the six months to December 31, while lower fuel prices should keep an extra $30 million in the kitty.

Read: Qantas sets course for return to profit

Qantas Group CEO Alan Joyce said the overall result would represent an improvement of some $500 million against an underlying loss of $252 million over January-June 2014.

“This demonstrates that the strategy we have outlined to transform our business is working.”

“Qantas is 12 months into a three-and-a-half-year program, but these strong early results give us the confidence that we will continue to meet all the targets we have set,” Joyce said.

“We are committed to completing the full, $2 billion program to ensure a sustainable, competitive position for the long term.”

Virgin Australia is also tipping a return to pretax profit in the same July-December period, although the airline has yet to nominate a number.

Read: Qantas, Virgin Australia both tip return to profit by year's end

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David Flynn
David Flynn is the editor of Australian Business Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.
 

25 comments

  • Merc25

    Merc25

    8 Dec, 2014 12:51 pm

    this is great news for Qantas and puts to bed all the doom and gloom out there on Qantas.

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  • leisuretraveler

    leisuretraveler

    8 Dec, 2014 12:58 pm

    the confirmation that qantas have really turned around their fortunes is for them to start ordering the new aircarft they desperately need suchas the 787.

     

    this is great news but it is the first step. 

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  • gumshoe

    gumshoe

    8 Dec, 2014 01:13 pm

    It took a long while and its excellent news, and yes now order some new aircraft please.

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  • Ozshanel

    Ozshanel

    8 Dec, 2014 05:18 pm

    Good grief, give them a chance.

    It's great that things are starting to turn around at Qantas but you can hardly expect them to just start spending billions on new aircraft when they have only just announced a return to profit.

    I don't understand this perception that Qantas' aircraft are old anyway.  Their average fleet age is the lowest it has been since privatisation and they haven't even gotten rid of all the 767s yet.

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  • watson374

    watson374

    9 Dec, 2014 12:56 am

    It's actually more about the hard product. The international aircraft just need a refresh, and they're getting it.

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  • Dave

    Grannular

    8 Dec, 2014 01:30 pm

    It makes me think. If it was so simple to turn things around, why wasn't it done sooner?

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  • Ozshanel

    Ozshanel

    8 Dec, 2014 05:20 pm

    Exactly.  It has taken someone with the courage and conviction of Alan Joyce to actually get it done.

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  • eminere

    eminere

    8 Dec, 2014 06:02 pm

    LOL!

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  • eight10man

    eight10man

    8 Dec, 2014 01:32 pm

    "... along with the falling cost of jet fuel."

    --> Major driver in costs, and not directly related to Joyce's business plan at all. But easy for him to walk away with the credit for it..!

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  • Ozshanel

    Ozshanel

    8 Dec, 2014 05:24 pm

    Maybe you need to read the article again.

    Cost savings from fuel price going down = $30 million

    Cost savings from the transformation = $350 million

    Alan Joyce can take as much of the credit as he likes.  He has earned it.

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  • eight10man

    eight10man

    8 Dec, 2014 06:06 pm

    Hi Ozshanel, you're right.. Sorry of me jumping the gun before reading properly.

    It's just that I saw an article in Europe last week that airlines were enjoying cheaper fuel prices all-around, but customers were complaining they weren't seeing that reflected in the fares - nor in the YQ fuel charge rates.. Hence I figured airlines just use that fuel benifit in their profits.

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  • tmsmile

    tmsmile

    8 Dec, 2014 06:57 pm

    Qantas has probably hedged a fair bit of their fuel at higher prices, so it may take a short time for them to benefit from lower prices, but it certainly has helped them...

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  • Hugo

    Hugo

    9 Dec, 2014 09:26 am

    Jet fuel helps. What also helps is shifting things around so that you can make a huge loss one year, a modest profit the next year, and take credit for the turnaround. 

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  • radiC00l

    radiC00l

    9 Dec, 2014 10:29 pm

    Don't forget that at least $100m due to accounting change re aircraft asset value writedown

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  • Chris_PER

    Chris_PER

    8 Dec, 2014 02:15 pm

    Great news for our iconic airline.

    However...I can't help think that the massive financial loss and impairments, followed by an amazing turnaround is hiding the gross mis-management of the company.  As I said before, it seems very corrupt to me.

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  • skystar

    skystar

    10 Dec, 2014 10:47 am

    Right on the money with the mis-management.The ball was dropped a long time ago with mainline as all the cash and routes were gobbled up by Jetstar and QF floundered.You only need a competent board and ceo with a bit of vision that could bring QF back to being a great airline but unfortunatley it wont be this one.

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  • Fonga

    Fonga

    8 Dec, 2014 02:48 pm

    Congratulations to Alan Joyce and his team. The fundamental changes to the business to make it more efficient, financially profitable, and a better airline are paying off. Staff morale has noticebly improved, service innovations are back, new routes opening, product is being upgraded, and a great new marketing campaign is restoring pride in the airline.

    Now let's get some of those 787-9s on board and that will really drive home some cost savings on fuel and aircraft utilisation while offering a fantastic new standard of airline travel.

     

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  • 11sjw

    11sjw

    8 Dec, 2014 04:45 pm

    Will we see a full time return to international services ex PER or ADL soon?

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  • ILIKEPLANES101

    ILIKEPLANES101

    8 Dec, 2014 09:23 pm

    Simple, if its the most profitable use of their aircraft then yes if not then no.

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  • Chris_PER

    Chris_PER

    9 Dec, 2014 09:11 am

    Who will crack first? VA or QF to announce year-round flights PER-SIN

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  • RK

    Ryan K

    9 Dec, 2014 09:05 am

    News Corp is referring to Mr Joyce as a "hero." Pah-lease! The man trashed the brand into oblivion over the past few years. Now they're on schedule to make a profit and he's a hero? I'd say it's more to do with the inflight entertainment now showing Sky News, Fox Sports and the recent abandonment of Fairfax Media that make's him a hero....

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  • Steve Atkin

    donk1

    10 Dec, 2014 10:19 am

    Still find it absolutely impossible for Qantas to even claim its turned around so quickly. Other companies would take yrs to recover from similar losses or be bankrupted . This claim is still wishful thinking and I'll only believe it when Qantas actually start returning dividends after nearly 10 yrs to shareholders.  Dividends are a sign of solvency and profits! Not delusional comments of returning to "Profits" after such huge llosses & no returns.

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  • radiC00l

    radiC00l

    10 Dec, 2014 10:39 am

    We'll never know, but I do wonder how much of their is pain is attributed to Emirates. Which was supposed to be the saviour of QFi. This has been replaced by only talk about their transformation plan. Am happy they're doing better but feel for those who have lost their jobs due in part to lousy mgmt decisions.

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  • Steve Atkin

    donk1

    10 Dec, 2014 11:06 am

    If other airline partners had of been allowed a little bit bigger slice of Qantas, this would have maintained both capital & assets to a stage where Qantas would never have ended up in the mess that it's in. The fact that Qantas have also tried a takeover or 2 & have failed dismally in the process have also added to their woes. Unfortanately trying to remain as a solely Australian owned airline no longer works. It's survival will depend on a percentage of current & future partners interests.

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  • John Allpike

    John1960

    10 Dec, 2014 12:57 pm

    Maybe we'll get some international flights from Perth again, Singapore Airlines are braining it and must be rubbibg thier hands together with no full service airline competition, four flight a day says something!!

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