Qantas tipped to grow despite turbulence

Qantas says it’s in a position to grow despite rising oil prices and global economic and political volatility.

Leigh Clifford and Alan Joyce. Pic: Bloomberg

Qantas chair Leigh Clifford says the nation’s No. 1 airline is in a position to grow despite continued geopolitical volatility, a shaky global economy and rising oil prices.

The chair of the Flying Kangaroo (QAN) said Qantas’s ambitious transformation program — which has cut more than $1.6 billion in costs — will insulate the company from any serious headwinds in the near future.

Qantas is on track to deliver $2.1bn worth of transformation benefits by June 2017 after it saved another $557m in this financial year.

“It is by far the biggest factor in Qantas’s turnaround over the past two years. And it positions Qantas well for the future,” Mr Clifford told the company’s annual general meeting in Sydney today.

Qantas posted a 57 per cent increase in full-year profit to $1.53bn this year, the best result in its 95-year history.

The bumper profit result was bolstered by a 38 per cent jump in operating cash flow to $2.8bn as the airline’s domestic, international and its budget brand Jetstar all posted record results.

Low oil prices (a key driver for the cost of jet fuel) at the start of this year were a massive boon for Qantas, which saved $664m for the full year.

Since then oil prices have been on a slow recovery and are now trading at $50 a barrel.

Mr Clifford said Qantas was prepared for any rises.

Fuel costs for the financial year ahead are expected to be no more than $3.2bn and the airline is expecting to pull out $450m of costs through its transformation program.

“Despite the recent rise in oil prices, our disciplined hedging program means we are well-placed to ensure that the group’s fuel bill is no higher this year than last year,” Mr Clifford said.

“These mixed conditions only underline the importance of management’s continued focus on transforming the business to perform well even in a challenging market. A smarter, leaner, more nimble Qantas.”

Qantas chief executive Alan Joyce reiterated Mr Clifford’s bullish outlook for Qantas, saying the airline’s transformation program had made Qantas “stronger than ever before.”

But Mr Joyce also said challenges remained.

“Like most other global carriers, intense competition on international routes means we’re seeing airfares below where they were 12 months ago. And the economic transition in Australia and broader geopolitical issues in the Northern Hemisphere continue to have an impact on aviation markets globally,” he said.