Qantas has filed a financial update to the ASX with includes an estimated $500-550 million group underlying profit before tax in the year to June 30.
It has also announced a $95 million benefit from a settlement of its claims against engine maker Rolls-Royce arising from the catastrophic engine failure that crippled the airline’s first Airbus A380 near Singapore on November 4 last year.
The sting in the new guidance is that Qantas international is estimated to lose $200 million in the full financial year, and as the airline emphasises in its statement, on an investment of $5 billion.
This issue with Qantas international is expected to be linked to a fresh attack on Qantas pilots and engineers in a speech and Q and A session that Qantas group CEO Alan Joyce will make to the National Press Club in Canberra shortly.
The statement doesn’t break out the domestic Qantas performance, nor the estimated contributions of Jetstar and the frequent flyer loyalty program.
While Qantas has increased its guidance on the impact of natural disasters on its full year results to $206 million, it puts the estimated cost of the volcanic ash episodes to June 20 at only $21 million.
This is what Joyce says in relation to international Qantas operations in the ASX statement.
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9 Comments
So the underlying loss for international is more like $105m, with the other $95m attributable to the A380 incident and its aftermath (since RR will, roughly, have paid compo to put Qantas where it would have been without the explosion, and almost all the costs incurred will have fallen on international)?
So AJ is going to announce “plans for its (intnl ops) strategic renewal later this year”.
I take it then, that we can look forward at the very least, to confirmation of a raftload of early-delivery 77L and 77W orders instead of the Dream-On Liner ; non-stops to, and a base in, the UAE or elsewhere in the Gulf flown and staffed by Australians, right?
Sure it sounds like international loses money, but don’t forget, as an asset, it helps drive value in other more profitable parts of the business eg. through its brand, through its link the FF programme, and for its support of the domestic market through on-carriage. Looked at this way, the loss is not quite as dramatic as it sounds. How does it rank with other full-service international carriers? As a group surely Qantas must be the most profitable.
Still, $200m is a lot of money especially on such a massive asset base – I can’t see those limousine pickups for cabin crew and the $150K wingwalkers going on for ever.
johnb, I believe the $95bn was entirely for damage to reputation and such; the actual damage to the aircraft was covered by insurance. Where, precisely, that leaves the $200bn figure, I’m not sure.
Sounds to me like QF will eventually fly only SYD and/orMEL to LHR and LAX internationally – everything else will be Jetstar. Or perhaps we can fly QF to SIN and then BA to LHR etc. However he breaks the eggs for his omelette, count me out! There are lots of other atrlines I can fly.
Joyce seems to be in the mould of Dixon – trash the product as much as possible. I’m even wondering if he has the same long term view as Dixon had of “private enterprise”, doubtless leaving with his $trillion bonus. Sorry, but I think the guy is a w***ker.
“Or perhaps we can fly QF to SIN and then BA to LHR etc”
You can; I certainly wouldn’t. Surely QF wouldn’t be that daft?
johnb78
Indeed you can, and I certainly wouldn’t either, but I’m afraid the way QF seems to be heading, nothing would surprise me. Why, for example, get rid of flights from Coolangatta to Sydney and turn them over to Jetstar? What was the rationale behind that sort of decision, which has been/is being repeated all the time?
Pessimistic, possibly, but I do think Joyce is taking QF down a path where there will be very few routes given it to fly, hence my comment above.
The thing is, SIN-LHR on QF has always been full when I’ve been on it (although admittedly I stick to the A380 flights – in fairness, although the QF London crew are lovely and the BA London crew appear to gargle with lemon juice, there’s not much difference between the two airlines’ 747s apart from crew affability).
Actually, the QF London crew point’s an interesting one. For how many years has QF recruited and permanently based its LHR-SIN and LHR-BKK cabin crew in London? Is that really any different from having permanently-recruited crews based in Singapore?