Qantas Airways has announced its financial figures for the 12 months leading up to June 30, 2014. During this period, the Australian carrier suffered an underlying loss before tax of A$646 million (US$604 million) and a statutory loss after tax of A$2.8 billion (US$2.6 billion).
While the statutory loss may appear staggeringly large, Qantas has highlighted that the figure reflects the underlying loss, along with the costs associated with the airline’s A$2 billion (US$1.8 billion) cost-saving program (including redundancies and aircraft retirement), plus a non-cash write-down of A$2.6 billion (US$2.4 billion) to the value of Qantas’ international fleet.
Qantas B767 business cabin
Meanwhile, Qantas’ low-cost brand Jetstar also reported a loss of A$116 million (US$108 million). Contributing factors include escalating fuel costs and a yield decline across the highly competitive South East Asian and Australian markets – both well served by other low-cost carriers.
However, not everything was grim for the Flying Kangaroo, as its Qantas Loyalty frequent flyer program continues to see double-digit growth. Earnings soared to an impressive A$286 million (US$267 million) – up from A$260 million (US$243 million) in FY13. The positive figures have been attributed to increased Qantas Frequent Flyer billings that grew by eight per cent, and the introduction of the Aquire loyalty program.
A380 flying over Sydney
The continued profitability of Qantas Loyalty means that the airline company has decided against a partial sale of the program, as was initially considered.
Instead, Qantas will be looking to accelerate its cost-saving program, which has already seen benefits of around A$440 million (US$411 million) in FY14. A further A$900 million (US$842 million) of cost-saving projects are currently being implemented, with the airline expecting these to benefit it by an additional A$600 million (US$561 million) in FY15.
Qantas lounge at Hong Kong International Airport
In addition, aircraft orders for the Boeing 787-9 have been pushed back by a year to 2017 as Qantas looks to restructure its fleet. Initially slated to take delivery of five new Dreamliners between 2016 and 2017, it has now been confirmed that the first B787-9 will not arrive until 2017.
The incoming Jetstar B787-9 orders will not be affected.
First class on the A380
Finally, Qantas chief executive Alan Joyce also announced that plans have been set in motion for the airline to split its domestic and international operations into separate entities.
“Our organisational structure will be clearly aligned to our strategy, with Qantas International in a separate entity to provide future options,” said Joyce.
The move is believed to stem from the recent changes to the Qantas Sale Act, which saw the foreign ownership restrictions for the airline relaxed. As previously reported by Business Traveller Asia-Pacific (see here), the new rules now allow foreign-owned airlines and investors to purchase a 49 per cent stake in Qantas.
By separating Qantas Domestic and Qantas International, investors would be provided more flexibility in terms of which entity they would like to invest in.
For more information, visit qantas.com.au