Qantas' chief executive Alan Joyce on Friday (Oct 24) said the Australian carrier expects to post a pre-tax profit in the three months to September following a record net loss, and was on track to complete its major cost-cutting programme.
Speaking at the airline's annual meeting in Melbourne, Joyce said preliminary figures showed Qantas had made an underlying profit before tax for the first-quarter of the 2015 financial year. "In four months we expect to deliver a first half-profit for 2015," Joyce said, reaffirming earlier guidance. "By the end of June next year we will have completed 80 per cent of our (5,000) announced job reductions. And by the end of June we also expect to have paid down A$1 billion (US$880 million) worth of debt, significantly de-leveraging the balance sheet."
The projected return to profitability followed Qantas' record annual net loss of A$2.84 billion for the 2014 financial year, driven by restructuring costs and a writedown of its ageing international fleet. It reported an underlying annual loss before tax of A$646 million.
The firm has embarked on a A$2 billion transformation programme, with chairman Leigh Clifford saying on Friday that "there can be no let up or slow-down in this process". Joyce said the airline was benefiting from the weaker Australian dollar - which hit a four-year low in early October - and falling oil prices, even as domestic demand remained weak. He said domestic market capacity growth, which was earlier projected to be about 1.0 per cent, was expected to be flat for the first-half, as a brutal battle with rival Virgin Australia eases.
Clifford told shareholders the immediate outlook for the company was mixed as the Australian economy transitions away from mining-led growth. "There is still a general cautiousness among consumers that is affecting all sectors of the Australian economy," he said. "Government traffic has been weaker, as a result of the tighter fiscal environment." He said the recovery in earnings from the domestic business would be driven by cost reductions in the short-term.
Several Qantas employees who are also shareholders challenged the board's transformation strategy at the annual meeting, with a member of the ground staff telling the board that morale was low.
Qantas' woes has also attracted criticism from the Transport Workers' Union, which said in a statement on Friday that management needed to "stop waging war on its workforce and instead engage with them to turn the airline around".
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