Global slowdown overshadows Qantas domestic boost

By Phil Boeyen, ShareChat Business News Editor

Thursday 21st February 2002

Interim profit at Qantas has fallen 41% in the six months ended December despite a dramatic improvement in domestic operations in the wake of the Ansett collapse.

The partly state-owned Australian carrier has reported net profit of A$153.5 million for the period with profit before tax at A$231.3 million, down 44.5% on the previous year.

CEO Geoff Dixon says conditions in the aviation industry had been difficult before the events of 11 September, when the airline had to contend with a weak Australian dollar and high jet fuel prices. However he says that after 11 September the demand for international travel fell dramatically, up to 30% on some key routes.

"This was the prime reason for our international operations, which represent 75% of Qantas' business, recording an Ebit loss of A$15.5 million compared to an Ebit contribution of A$285.9 million in the previous corresponding period.

"The sharp decline in the profitability of our international operations far outweighed the increased profitability of our domestic operations after the collapse of Ansett. Domestic operations contributed A$180.1 million in Ebit, an increase of A$62 million.

Mr Dixon says that Qantas had moved quickly, but at significant cost, to provide air travel for Australians following the collapse of the formerly Air NZ-owned (NZSE: AIR) Ansett Group.

"We carried 50,000 stranded Ansett passengers for free and another 65,000 at greatly reduced fares. The cost of carrying these passengers and the cost of wet leasing aircraft to cater for the shortfall in domestic capacity was over A$60 million."

Qantas chairman, Margaret Jackson, says the six months to the end of December had been the most tumultuous in the history of aviation the company's financial performance in the difficult period had been outstanding.

"It is impossible to directly compare the performance of this six months to the prior period because of the external factors such as 9/11, Ansett and the Olympics. However, thanks to the hard work and dedication of our people we have performed better than just about any airline in the world,"

Mr Dixon claims growth in the domestic Australian market is now depressed and believes the capacity planned for the market over the next 12 months by Qantas, Virgin Blue and a remodelled Ansett will result in an "extremely competitive and aggressive environment."

Nevertheless he says trading in the first six weeks of this year indicated the company is still on track to deliver a full year profit before tax in line with last year's result of A$550 million.

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