Walkouts dent Qantas profits

City A.M. Reporter
Australia’s Qantas Airways yesterday flagged a fall in first half profits of at least 50 per cent as a series of strikes, the grounding of the fleet and high fuel bills take their toll.

But the airline, which suspended all flights for two days last month in a drastic attempt to force a resolution with unions, soothed investors by indicating the move had paid off, with international forward bookings back to normal.

Qantas said the second half outlook remained volatile given global economic uncertainty, fuel prices and foreign exchange rates.

It also denied a media report that a plan to set up an Asian premium airline, seen as key to turning around the loss-making international operations, was set to be dropped.

“For us investors, this year expectations are low. Our focus is entirely on how the recovery is shaping up, plans for the Asian hub. So far that looks positive,” said David Liu, head of research at ATI Asset Management, which owns Qantas stock.

Qantas shares, which briefly fell after the announcement, recovered to close up 3.4 per cent at $1.50.

The airline said it expected an underlying profit before tax of between A$140m (£89m) and A$190m in the six months to December.

That compares with A$417m a year ago and a A$250m average in a straw poll of three analysts.

“Since the termination of industrial action by industrial umpire Fair Work Australia we have seen customers return to Qantas,” chief executive Alan Joyce said in a statement.

With both Qantas and the three unions involved submitting to the industrial umpire for a forced settlement the threat of service disruption has vanished.