Qantas is bound to go broke if it keeps losing

ZERO in on one figure - $646 million. That’s what you can think of as Qantas’s “real” loss. Keep losing that every year and Qantas would go broke.

(FILES) A file photo taken on August 28, 2013, shows Qantas aircrafts on the tarmac at Sydney's International Airport. Struggling Australian flag carrier Qantas on August 28, 2014, posted a huge annual net loss of 2.65 billion USD, but chief executive Alan Joyce insisted clearer skies lie ahead. AFP PHOTO/FILES/GREG WOOD

ZERO in on one figure - $646 million.

That’s what you can think of as Qantas’s “real” loss.

Broadly, the difference between the money coming in and going out. Keep losing that every year and Qantas would go broke.

So yes, it has to try to boost revenues - the money coming in.

And yes, it has to cut costs - the money going out.

CEO Alan Joyce says it’s mostly done both - especially the second with its plan to brutally but unavoidably slash 5000 jobs, 2500 or so of them already gone.

The big headline number - the $2.8 billion loss - is real enough. But it’s mostly from writing off the value of assets - planes in its fleet.

RECORD LOSS: How Qantas lost $89 a second

The big problem area is the international business. That contributed $497 million of the $646 million figure.

It’s why its link with Emirates, allowing Qantas to slash its own flights was so critical.

Joyce says it’s working.

Qantas domestic going head-to-head with a Virgin, aggressively piling on planes and slashing fares, essentially washed its face, breaking even.

Jetstar lost money, but like the parent, mostly from the international operations.

QANTAS CUTS: Jetstar the new Flying Kangaroo?

WHAT YOU NEED TO KNOW: Qantas job cuts drama

Both the main airline and Jetstar were hit by much higher fuel costs and the carbon tax.

Qantas says it couldn’t recoup the tax in higher fares, so now it’s gone don’t expect a price cut.

The one part of the business that made a handsome profit - $286 million (without which the overall real loss would have approached a cool $1 billion) - was the frequent flyer operation.

It’s also why it’s so critical for Qantas to maintain the loss-making international arm and the

international linkages.

Abandon them and the frequent flyer business would start to shrink.

Joyce says the tough decisions have been made and the airline has turned the corner. He’s

predicting they’ll make a profit in the current half.

Oh, and there was no dividend for shareholders.

Originally published as Qantas is bound to go broke if it keeps losing