Flying Kangaroo’s bounce brought down a notch

SIX months into the financial year, Qantas has posted a half-billion dollar profit. The 25 per cent fall has been driven by an international airfare war.

QANTAS’s bottom line has withstood a 25 per cent blow to profits for the first half of 2016-17 as cheaper oil drove down airfares on international routes.

The Flying Kangaroo has posted a $515 million after tax profit, down from $688 million for the previous corresponding period.

The underlying profit before tax was a bumper $852 million, down 7.5 per cent on the previous half-year.

In its report to the Australian Securities Exchange, Qantas noted the decline compared with the previous result “reflected the inclusion in last year’s result of a $201 million gain from the sale of Qantas’ Sydney Airport Terminal”.

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Qantas boss Alan Joyce at the launch of Sydney-Beijing flights. Picture: News Corp Australia

All parts of the Qantas operation remained in the black for the half, with Jetstar and Qantas Loyalty both increasing their profits.

Qantas International took the biggest hit, with underlying EBIT of $208 million, down $62 million.

The report noted the introduction of more efficient Boeing 787-9 aircraft in late calendar 2017 would cut Qantas International costs further, improve the experience for customers and create new network options.

Qantas Group CEO Alan Joyce said conditions in the international market were “challenging” with cheaper oil leading to strong capacity growth on routes and pushing fares down.

“Qantas International isn’t immune from that impact,” Mr Joyce said.

But overall, Mr Joyce said the result confirmed the airline was “one of the best performing in the world”.

“It means that we can keep rewarding our shareholders, investing for customers and building an exciting future for the national carrier,” he said.

Industrial Designer David Caon with the new Qantas's Premium economy seats for the new 787-9, Picture: Jeremy Piper/News Corp Australia

Shareholders can expect a seven cents a share dividend, 50 per cent franked, plus the rest of the $91 million buyback announced last August.

“Once these initiatives are complete, we’ll have reduced the number of Qantas shares by approximately 18 per cent and returned over $1.6 billion to shareholders since 2015,” said Mr Joyce.

The design for the 787-9 Premium Economy was also unveiled by Qantas, promising a “class-leading level of comfort” for passengers.

The David Caon-designed seat features a unique recline motion to “cradle the passenger” without encroaching significantly on the person behind.

“This new Premium Economy seat has serious wow factor,” Mr Joyce said.

“You have to experience how well it supports you when you recline to realise it’s completely different from anything else in its class.”

Originally published as Flying Kangaroo’s bounce brought down a notch