Qantas H2 profit falls, says weathering challenges
SYDNEY (Reuters) - Australian airline Qantas Airways Ltd (QAN.AX) reported a 2.5 percent fall in second-half profit on Thursday, below analysts expectations, as fuel prices soared, but predicted it would meet forecasts for the current year.
Like other airlines worldwide, Qantas hit tough times in the second half of the year ended June 30, as soaring oil prices and softer demand for travel in some key markets took their toll. But it said it was better placed than almost any other airline to meet the challenges facing the industry.
On Tuesday, Qantas's main domestic rival, Virgin Blue Holdings Ltd (VBA.AX), reported a 55 percent fall in 2008 profit on high fuel prices, cut its dividend and painted a gloomy outlook, sending its shares tumbling.
"This is a tough industry and this is by any stretch of the imagination a pretty good result," Chief Executive Geoff Dixon told a results briefing.
"Very few countries in the world have what Australia has at the moment, which is effectively viable airlines across the board, including obviously Virgin."
Airlines around the world have been cutting capacity, scrapping growth plans to battle soaring fuel costs, with the International Air Transport Association forecasting a $6.1 billion loss for the industry worldwide.
The crude oil price CLc1 has fallen 20 percent since peaking near $150 a barrel in mid-July, but it has not muted the cries of the airline industry, with Virgin Blue warning that it expected the year ahead to be its most challenging yet.
And on Wednesday, the International Air Transport Association's boss told a Sydney luncheon that "at least 25 airlines have gone bust" in recent months and that the industry was still on course to lose up to $6.1 billion this year.
Qantas made a net profit of A$351.4 million for January-June, down from A$360.4 million a year earlier, by Reuters calculations. Analysts had expected a second-half net profit of A$402.4 million.
Qantas shares were up 0.6 percent at A$3.42 in a broader market .AXJO that was down 1.1 percent.
"Assuming no further deterioration in economic conditions, Qantas expects its 2008/09 profit before tax to be broadly in line with analyst consensus forecasts," it said in a statement.
Analysts are expecting a pre-tax profit of A$743 million in the year ahead, about half the A$1.4 billion reported for 2007/08.
Qantas warned that its fuel expenses would be more than A$1.6 billion higher in 2008/09 but said it had hedged 81 percent of its crude-oil exposure at a worst-case all-in cost of $118 per barrel. Crude currently fetches around $116 a barrel.
Qantas also raised its dividend, declaring a final payment of 17 cents a share for a full-year payout of 35 cents, up from 30 cents in 2006/07.
At Wednesday's closing price, Qantas shares had lost about 37 percent so far this year, underperforming the benchmark S&P/ASX 200 .AXJO index by about 20 percent.
($1=A$1.15)
(Editing by Jonathan Standing)
