Qantas joined the Confession Season yesterday on the upside with confirmation of previous markets for a solid rise in earnings to an new all time record for the year to June 30.
The airline yesterday forecast a 10.7% rise in full-year underlying pre-tax profit after reporting a rise in third-quarter revenue.
The airline forecast it would report underlying profit before tax in the range of $1.55 billion to $1.60 billion for the fiscal year ended June 30, compared with $1.4 billion profit a year earlier, it said in its third-quarter update released yesterday.
The $1.4 billion figure from 2016-17 was the previous all time high.
The guidance is in line with the average estimate of $1.55 billion market guidance. The full year result will be released in late August.
Group revenue for the third quarter ended March 31 rose 7.5% to $4.25 billion.
The shares jumped more than 8% to close at $6.27. That was after the strong suggestion from the company that there could be more capital management later this year as has been in past years with small share buybacks, and now the resumption of dividends.
“The board will consider further capital management initiatives in line with the Group’s financial framework as part of full-year results in August 2018," Qantas said in a statement on Wednesday.
“The third quarter follows the Group’s record half year result in February and has been underpinned by positive market conditions, capacity discipline and ongoing transformation,” the airline said in yesterday’s release.
"Group Domestic (opens in new window)Unit Revenue increased by 8.0 per cent compared to the prior corresponding period. This reflects strong demand across key markets, including continued recovery of the resources sector and gains within the small-to-medium enterprise segment.
"The timing of Easter, which fell partly in the third quarter in FY18 compared with the fourth quarter of FY17, also increased demand for leisure travel compared with the prior corresponding period. Group Domestic capacity decreased by 1.9 per cent.
"Group International (opens in new window)Unit Revenue rose by 5.2 per cent. This performance was driven by underlying demand growth and higher load factors, as well as the benefits of ongoing network adjustments to better match demand. Qantas Group International capacity grew by 2.3 per cent while total market capacity grew by 5.0 per cent.
"The Qantas Group affirmed its existing outlook for capacity, fuel costs, capital expenditure and transformation benefits in the second half of FY18. Based on these expectations, Qantas anticipates a Full Year Underlying Profit before tax of between $1.55 billion and $1.60 billion,” the airline said yesterday.
CEO Alan Joyce said in yesterday’s statement that “the third quarter performance showed the company’s ability to achieve continued earnings growth, despite the rise in jet fuel costs that all airlines are dealing with, and to reinvest."
“Qantas is on track to deliver another record full year result even though we’re facing a $200 million increase in our total fuel bill in FY18,” said Mr Joyce. “We’re seeing solid results from each of our business units, which is a reflection of broadly positive trading conditions and the work we’ve done to strengthen the Group.”
The airline said it had lifted its fuel hedging for 2018-19 to around 70% of expected costs from 50% at the interim profit report in February, with participation rights via a series of derivatives.
Qantas Airways has ordered another six Boeing 787 Dreamliners, worth around $A2 billion, to replace the last of its ageing fleet of 747 jumbo jets.
The airline said on Wednesday the order would bring its fleet of long-haul 787-9s to 14 aircraft by the end of calendar 2020, and see it withdraw from service the final six of its 747-400s not already due for retirement.
Mr Joyce said the airline’s strong financial performance in recent years had made it possible to order more Dreamliners, which are more fuel efficient than 747s and would give customers a better on-board experience.
