Qantas First-Half Profit More Than Doubles on Dreamliner Compensation
By Jerin Mathew | February 21, 2013 5:32 PM EST
Australian airline Qantas has reported a sharp rise in its first-half profit, which nearly tripled as the carrier benefits from compensation from Boeing for its cancellation of 787 Dreamliner orders.
For the six months ended on 31 December, the company reported a net profit of A$111m ($114m, £75m), compared to A$42m a year ago. Underlying profit before tax rose by 10 percent to $223m. Results for the period include a A$125m compensation received from Boeing.
Following the results, the company's shares gained as much as 6 percent in Sydney.
However, losses at the company's troubled international division narrowed to A$91m from A$262 million in the year-ago period. Qantas' international operations had been hurt due to lower demand from key markets in increased competition from low-cost rivals and high fuel costs.
Following continued losses, the airline made efforts to streamline its operations by cancelling loss-making routes and cutting jobs. Qantas also made an agreement with UAE airline Emirates to collaborate on pricing, sales and scheduling.
These moves have started impacting the company's results, according to CEO Alan Joyce.
"The operating environment remains complex and volatile, but we are now beginning to realise the benefits of the tough decisions that we have made over the past 18 months," Joyce said in a statement.
Nevertheless, the company's domestic division reported a decline in profit to A$218m from A$328m from a year earlier. Qantas attributed the weak results primarily to increased competition in the sector.
"We have seen elevated levels of capacity growth from competitors attempting to claim market share from Qantas Domestic," Joyce said.
Looking forward, the company said the environment remains challenging and volatile. It expects to increase group capacity by 0.5-1.5 percent in the second half from the year-ago period.
Separately, the company said it would upgrade its entire fleet of Airbus A330s and order new Boeing 737-800s for its international and domestic operations. The upgrade of the A330s will begin in late 2014, while the five additional Boeing orders will be delivered during 2014.
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