Qantas Records 90 Percent Drop of Profit

Submitted by Share Trading on 19 August, 2009 - 10:26

One of the major airlines companies of Australia, Qantas Airways (QAN) is planning to move forward with a $1.5 billion worth of cost cutting plan after it went through one of its hardest times due to the global financial crisis. It is to be mentioned that the Airways was put into the red for the second half and the annual profit dipped as much as around 90 percent.

The company has reported a net profit worth of $117 million for the year that ended on June 30. The company was also pretty much incapable of providing any guidance for the 2010 fiscal year due to the downfall in the global aviation industry which was hit hard by the financial crisis. Qantas Airways began the year with a $288 million worth of interim profit which later in the second half turned into a $107 million loss, which was motivated by the change of strategy of the competitors who increased their capacity during the time when the demand was declining. Net profit was below consensus expectations of the experts. However, $181 million worth of profit before tax was in the higher end of the company’s guidance of $100 million -$200 million.

According to Alan Joyce, the chief executive of the Qantas, The airways was one of those few companies that posted a profit in the aviation industry which was previously forecasted to record a loss of $9 billion US dollars. Mr. Joyce also stated that at a time when there is a whole lot of uncertainty existing in the global economy and also because of the volatility of the fuel price, right at the moment it is not going to be wise to come up with a guidance. This had consequences in the share market as well with boosting up Qantas shares up 9c to $2.69 even though Qantas is not going to pay final dividend for the first time ever since it was listed.