Wirraway

Mon "Sydney Morning Herald"

Dixon tips profit even as Qantas bleeds week by week
By Richard Salmons
May 12 2003

Qantas chief executive Geoff Dixon has pledged that the airline will make a profit in the December half, even while acknowledging that the SARS epidemic has left the airline making losses on a week-to-week basis.

Mr Dixon said yesterday that Qantas was still in the black on a full-year basis but the SARS crisis had caused it to run at a loss in recent weeks.

"We haven't set what our first half-year profit will be for next year but I'd only say that we're confident we can make a profit," Mr Dixon told Business Sunday.

Mr Dixon conceded that Qantas had not been making money in the last couple of weeks but loss-making weeks happened even in good years.

"We've been in losses for a while but were also cutting costs at the same time," he said. There were also recent periods when Qantas was making money, he added.

Last week Qantas announced its second profit downgrade in six weeks and said it would shed 1500 staff and postpone $1 billion in capital expenditure. Analysts slashed profit forecasts for 2002-03 by 30 per cent from the level forecast in March.

Mr Dixon said that despite the operational problems, Qantas was not in financial trouble as a company, as it had $2 billion in cash reserves and access to other liquidity. He did not expect to have to dip into that cash based on the situation so far.

Qantas's domestic traffic has been affected in terms of reduced transfers from international flights, Mr Dixon acknowledged. However, he said this was not costing the company market share because its competitor, Virgin Blue, was not set up to take on in-bound passengers. On a separate issue, Mr Dixon said Qantas was continuing to lobby the Federal Government to lift foreign ownership restrictions, which would help the airline raise capital more cheaply.

"If you want a strong viable airline in this country, Qantas has got to be able to compete against every other carrier on an even base," he said.