TURNAROUND TALE – HOW QANTAS REGAINED ALTITUDE
After a record a $2.
8 billion loss in 2013/14, Qantas has returned to profit thanks to the airline’s major operational overhaul and falling fuel costs. Profit soared 85 per cent to a record $1.03 billion in 2015/16, and paid its first dividend in seven years.
A cost cutting program launched in February 2014 is on track to deliver $2.1 billion in benefits by June. About $1.9 billion has been delivered to date, through the axing of around 4, 800 jobs, fleet and route changes, a wage freeze and a restructuring of maintenance and catering operations.
Concerns about the economy contributed to a four per cent fall in underlying earnings in the first half of 216/17, but optimism improved in the three months to December.
Increased capacity and lower airfares in the sector led to a 23 per cent fall in underlying earnings for the overseas operations, and capacity is expected to ease in the second half of the financial year.
The star performer in the half year thanks to solid demand for cheap fares. There was strong demand on its Australia to Japan route at Christmas as travellers headed to the ski slopes. Underlying earnings rose five per cent.
Qantas’ loyalty program has 11.6 million members, and posted a three per cent rise in underlying earnings to a record $181 million – about 20 per cent of the airline’s total earnings. Double digit growth is forecast for the second half, with a full six month contribution from its new Woolworths program.