Qantas profits plummet 16 per cent with the drop blamed on higher fuel costs – but the airline will still return $500million to shareholders
- Qantas has blamed a comparative plunge in profits on a spike in fuel costs
- The airline experience a 16 per cent drop while still returning a $500m profit
- Within the six months, Qantas’ spending on petrol jumped from $416m to $2b
Qantas has blamed a significant plunge in profits on higher fuel costs, while still managing to generate a half-billion-dollar return for investors.
The airline experience a 16 per cent – or or $97million drop – in the second compared to the first half of last year, which is attribute to a skyrocketing price of fuel.
Within the six months, Qantas’ spending on petrol jumped from $416m to $2billion which it couldn’t fully absorb through other components of its business.
The recent jump follows Qantas launching a buyback which will result in $3.6b being handed back to shareholders since October 2015.
Qantas has blamed a significant plunge in profits on higher fuel costs, while still managing to turn a half-billion-dollar return
Chief executive Alan Joyce said the spike created ‘significant headwind’ for the company and forced Qantas ‘to recover as much of the cost as (they) could’.
‘Higher oil prices were a significant headwind and we moved quickly to recover as much of the cost as we could,’ he said.
‘That’s easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that’s reflected in the segment results.’
The executive claimed the organisation’s bookings were strong and fuel costs are expected to be recovered in the latter half of the 2019 financial year.
Mr Joyce also declared there’s ‘no comparison’ between his Qantas Group and rival Virgin Australia whose profit grew $4million to a total of $73.8m.
‘There is really no comparison between the two,’ he said.
Within the six months, Qantas’ spending on petrol jumped from $416m to $2 billion which it couldn’t fully absorb through other components of its business
‘At a statutory level, the Qantas Group made 10 times what the Virgin Group did in the domestic market.
‘We’re seeing 62 per cent of the domestic market share and 80 per cent of the profit share so we really are in a strong position in the domestic market.’
Along with the expected stabilisation of fuel prices, Qantas expects an improvement from the previous period due to Easter falling in school holidays this year.
‘Competitor capacity growth has slowed internationally and is relatively flat domestically, and oil prices have declined from the peaks we saw late last year,’ Mr Joyce said.
‘These factors point to a strong second half and we expect to completely recover our increased fuel costs by the end of this financial year.’
CEO Alan Joyce (pictured) said the spike created headwind’ for the company