Qantas profit drops ...
21/02/2019 | Author: David Winning @ The Australian Business Review
Qantas Airways says higher fuel costs helped to drive down its half-year net profit by 16 per cent, but it would return $500 million to shareholders via an increased dividend and new share buyback program.
Australia's biggest airline reported a net profit of$498 million for the six months through December, down from $607 million a year earlier, reflecting in part a 27 per cent increase in its fuel bill, On an underlying basis, which strips out one-time costs, Qantas's profit fell 19 per cent to $780 million.
Directors declared an interim dividend of 12 cents a share, up from seven cents a year ago. The company also intends to repurchase shares worth a further $305 million.
"We're really pleased with how the business responded to the challenges and opportunities we saw in the half," chief executive Alan Joyce said. "Across our network, capacity is broadly meeting demand, including shifts to capitalise on the continued strength of the resources sector."
Qantas has faced tough competition on its international routes amid an uptick in tourism to Australia. Still, the airline has steadily lifted profits in recent years after it benefited from its cost-cutting program and the end of a costly price war with rival Virgin Australia Holdings.
Recent weakness in the Australian dollar has made domestic travel more appealing than overseas trips to Australian residents, although some investors worry that a fading wealth effect as house prices fall will deter some travellers from flying. At the same time, China's economic slowdown risks slowing growth in outbound Chinese tourism.
Qantas has also grappled with higher fuel costs, after oil prices spiked in the months leading up to Christmas. The carrier projected its annual fuel bill would be $3.90 billion, up 21 per cent versus fiscal 2018.
"Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could," Mr Joyce said. "That's easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that's reflected in the segment results we're reporting today."
Dow Jones Newswires
***Article image courtesy of Maggie Tran @ AIPA***