Record earnings cap a turbulent year for Qantas
Record earnings cap a turbulent year for Qantas
Danny John
August 16, 2007 - 10:40AM
Margaret Jackson said the past year had been an unsettling one for Qantas.
Photo: Andrew de la Rue
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Qantas capped a tumultuous year that included a failed $11b private equity bid for the airline, by declaring today a record pre-tax profit of $1.03 billion.
The result was a vindication of the airline's strategy to expand its international and domestic operations, but also underlined claims by major shareholders that the carrier was undervalued by the takeover bid that collapsed earlier this year.
Net earnings of $720 million was also a record for the company which has announced an on-market buy-back of around 10 per cent of its shares which when completed over the next few months will reduce the equity base by $1 billion.
This is expected to further underpin the share price of the company which up until the latest market turmoil has consistently outperformed the Airline Partners Australia consortium's offer of $5.45 a share.
Shareholders have also been rewarded with a fully franked ordinary dividend of 15 cents per share doubling the full year pay out to 30 cents per share, a rise of 36 per cent on the corresponding period last year.
As announced earlier this week, the profit figure includes a provision for an expected fine by US regulators of $47 million to cover the airlines alleged involvement in a fuel-surcharge price-fixing cartel by its freight division.
Outgoing Qantas chairman Margaret Jackson, who quits later this year after the controversy generated by the APA takeover bid, said the result had significantly improved the company's cash position. This now stood at $3.4 billion which provided enough surplus capital to make the share buyback possible and therefore reward shareholders further.
Qantas chief executive Geoff Dixon said the profit figure, and the underlying strong operating position, had been underpinned by its two airline brand strategy with JetStar replacing the main airline on many routes that have been previously unprofitable.
Following its launch in May 2004 JetStar was now making a pre tax profit of $112 million per annum, this is expected to increase further over the coming year as Qantas outlined further growth in profit for 2007/08 well in excess of today's result.
The airline has decided to grant $1,000 worth of shares and a cash bonus of $1,000 to all of its staff as a reward for their loyalty during a difficult but extremely profitable year.
Ms Jackson said the past year had been an unsettling one for Qantas employees but that the airline had now moved on from the takeover and was now concentrating on future growth.
In early trading, Qantas defied the market malaise to rise 1.7 per cent to $5.37.