The Qantas turnaround is complete

Qantas chief executive Alan Joyce. Photo: Peter Parks/AFP/Getty Images

Qantas today posted its second-highest underlying profit result in the 97 year history of the national airline.

The underlying profit before tax was $1.4 billion, down 8.6% on last year but above guidance, and a statutory profit after tax of $852 million, down 17.2%.

Last year’s result, a record underlying profit of $1.53 billion just two years after a $2.8 billion loss, was boosted by cash from the sale of the Sydney Domestic Terminal.

CEO Alan Joyce says the result marks completion of a turnaround plan that has repositioned Qantas as one of the most profitable airline groups in the world.

“Three years ago, we started an ambitious turnaround program to make the Qantas Group strong and profitable,” he says.

“We tackled some difficult structural issues, became a lot more efficient and kept improving customer service.

“Today’s announcements show this plan has well-and-truly paid off. It’s delivered $3.5 billion in cumulative underlying profit, record customer satisfaction and the opportunity for Qantas to grow.”

In the domestic market, Qantas and Jetstar combined reached a record $865 million in underlying EBIT (earnings before interest and taxes), making them again the two most profitable airlines in Australia with around 90% of the total domestic profit pool.

Qantas International saw an improvement in the second half. It posted an Underlying EBIT of $327 million, its second highest result but a fall of $185 million on last year.

The company declared an unfranked dividend of 7 cents a share. A further on-market buyback of up to $373 million has been announced.

Joyce says the total return for Qantas shareholders, including share price appreciation and distributions, has been around $9 billion since the transformation program began in February 2014.

The Qantas results by division:

Source: Qantas

Joyce says Qantas is now targeting an average of $400 million in savings a year.

“We operate in a very competitive environment, so continuous improvement is crucial,” he says.

“We have a plan to keep delivering sustainable returns well into the future. We’re investing in lounges, Wi-Fi and cabin upgrades; looking at new aircraft to evolve our network; and diversifying into new businesses like insurance and financial services.

“Our people remain central to our success, and that is why it is so pleasing that we are able to grant another
bonus to around 25,000 non-executive employees to mark the successful completion of the turnaround program.”

Qantas has announced a non-executive bonus of $2,500 for full-time and $2,000 for part-time employees, for the successful completion of the turnaround program.

Shares given to Joyce as part of his performance package pushed him in to sixth place in the list of the 10 highest paid CEOs in Australia. He was paid $14.3 million last year.

The 2017 Qantas result in numbers:

Source: Qantas