Qantas posted a 25% slide in after tax profit to $515 million for the half year to December, reflecting a softer domestic market and competition on international routes.
Revenue was down 3.3% to $8.184 billion.
Taking out costs for redundancies and restructuring, underlying profit was down 7.5% to $852 million, the upper end of the company’s own forecasts. Last year’s result included a $201 million gain from the sale of Qantas’ Sydney Airport terminal.
In early trade, Qantas shares were up 6% to $3.76.
The airline says net passenger revenue fell 3% or $243 million to $7.064 billion.
Domestic operations reported underlying EBIT (earnings before interest and taxes) of $371 million, down $16 million. International’s underlying EBIT was down $62 million to $208 million.
Qantas in October warned of strong competition on international routes and subdued domestic demand due to the federal election.
CEO Alan Joyce says Qantas is one of the best performing airlines in the world.
“Our transformation program has built a strong, sustainable business that generates returns throughout the economic cycle,” says Joyce.
“Qantas and Jetstar’s domestic operations produced an outstanding result and Qantas Loyalty continued to thrive. It’s a combination that keeps delivering and sets us apart from our competitors.
“The international market is tough because of capacity growth and lower fares, and Qantas International is not immune from those pressures. But the work we’ve done on removing costs and making the business more efficient means Qantas International is outperforming its peers in the region.”
The Qantas Transformation Program delivered $212 million of benefits over the six month, bringing the total delivered under restructuring to $1.9 billion.
Giving his outlook for the airline, Joyce says he expects Qantas and Jetstar to keep performing strongly.
“Qantas Loyalty is expected to return to double digit growth,” he says.
“And that combination will continue to give us a sustainable earnings core, supported by improving consumer confidence.
“Internationally, the market will remain challenging but we expect the revenue trend we saw in the first half to moderate.”
The company declared an interim dividend of 7 cents a share, 50% franked.
The detail on the results by business unit: