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QANTAS Airways said today its load factors -- a measure of the proportion of seats filled on its planes and a key profit driver -- increased in November in a faint sign a turnaround strategy for its international unit is taking effect.
The group's load factor for the month, which also includes distances flown by passengers, rose 0.5 percentage points from a year earlier to 80 per cent, the airline said in a statement. Financial year-to-date load factors, however, are down 1 percentage points.
Australia's flag carrier has been shrinking the size of its international unit to combat soaring jet fuel costs most harmful to airlines with bases in far flung locations such as Australia. Routes cut by Qantas since last August include Singapore-Mumbai, Auckland-Los Angeles and Sydney-San Francisco.
November load factors in the carrier's domestic unit were hurt as Qantas continued to engage in a battle for market share with Virgin Australia by expanding flying capacity. The fall was offset, however, by an improvement at its international division.
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Although the route closures translated into a 3.1 per cent fall in international passengers, the fall was accompanied by a deeper 7.1 per cent decline in flight capacity. The lower availability of seats pushed up the division's load factor by 2.4 percentage points.
Total passengers across the entire Qantas business in November jumped 6.4 per cent from a year earlier, when the airline was reactivating its fleet following the grounding of some of its planes to ward off industrial action.
Its shares rose 1.9 per cent by midday in Sydney, outperforming a 0.3 per cent rise in the broader Australian stockmarket as investors digested the figures.
The airline also hopes to save costs by forging alliances with rivals and this week received provisional regulatory approval for a proposed tie-up with Emirates Airline.
Standard & Poor's said Qantas's BBB- credit rating was unaffected by the regulatory decision.
"The wide-ranging agreement substantially addresses the declining market share and profitability of Qantas' European network and allows Qantas to more appropriately service its Asian network," S&P Credit analyst Anthony Flintoff said in a statement today.
"Nevertheless, we do not view the partnership as a panacea," he said.
Qantas's November update also displayed continued rapid growth at low-cost offshoot Jetstar, home for much of the airline's new jet deliveries.
Flight capacity at Jetstar domestic in November jumped 18.2 per cent amid a 14.9 per cent rise in passengers, while capacity at Jetstar international rose 10.5 per cent amid a 17.1 per cent jump in passengers.
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