Qantas squeezes more revenue on trans-Tasman route in busier market

Monday 29th December 2014

Qantas Airways, Australia biggest airline, lifted revenue on trans-Tasman routes by 18 percent last year amid increased traffic flows.

The airline's subsidiary Jetconnect, which manages the group's trans-Tasman passenger schedule, lifted operating revenue to $75.3 million in the 12 months ended June 30 from $64 million a year earlier, according to financial statements lodged with the Companies Office. That's the most revenue Qantas has generated from the trans-Tasman route since 2009, and outpaced rival Virgin Australia's sales over the same period, which edged up $1.9 million to $274 million in the same period.

Market leader Air New Zealand reported a 4 percent drop in revenue from Australia and the Pacific Islands to $682 million, while at the same time increasing passenger numbers 3 percent to 3.28 million across those routes.

New Zealand government figures show the number of trans-Tasman flights increased 1.5 percent to 41,656 in the year ended June 30, while New Zealanders departing for Australia climbed 10 percent to 1.07 million and arrivals from Australia advanced 4.2 percent to 1.23 million passengers.

Still, Qantas's Jetconnect unit reported a 14 percent drop in annual profit to $7.6 million, with a 20 percent lift in manpower and staff related costs to $44.7 million and a 26 percent increase in aircraft operating variable expense to $19.2 million.

The Australian airline's discount Jetstar brand lost ground in New Zealand, with 20.7 percent of the domestic market as at June 30, down from 22.4 percent a year earlier, when it published the group’s annual result in August. Passenger numbers dropped 7.7 percent to 1.72 million and revenue passenger kilometres fell 6.2 percent to 1.13 million. Capacity shrank 4.5 percent to 1.42 million available seat kilometres, though the unit said at the time it had a strong and improving second-half performance across key metrics leading into the 2015 financial year, and had "strong yield improvement on key routes."

Sister New Zealand unit, Jetstar Airways, which employs and hires cabin and technical crew for budget brand Jetstar Airways Pty Ltd, reported a profit of $2.5 million in the 12 months ended June 30 from $2.4 million a year earlier, according to separate financial statements. Operating income, which is derived from the wider Jetstar unit, increased 4.1 percent to $27.9 million, lagging the 5.6 percent increase in manpower and staff related costs of $24.7 million.

In August the Australian airline embarked on a transformation programme with plans for more redundancies and an overhaul of its structure as it seeks to return to profitability. It posted an annual loss of A$2.84 billion in the June year as it wrote down the value of its international fleet by A$2.56 billion, faced fleet restructuring costs of A$394 million and redundancy and restructuring costs of A$428 million.

Since then, Qantas has said it anticipates all operating segments to be profitable in the first half, forecasting underlying pre-tax profit of between A$300 million and A$350 million in the six months ending Dec. 31, which would be its best result since 2010.

Shares of Qantas rose 2.1 percent to A$2.39 on the ASX, and have climbed 114 percent this year.

BusinessDesk.co.nz

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