Qantas Airways pays first dividend since 2009

dubai - Airline's H1 net profit up 80% from corresponding period last year

Australian national carrier Qantas Airways announced its first dividend since 2009 after posting record annual profits on Wednesday.

Qantas, which had entered into a successful partnership with Dubai's Emirates Airlines, reported a net annual profit of Aus$1.42 billion ($1.08 billion) in the year to June 30, an 80 per cent increase from the previous corresponding period.

In a statement, the carrier said following a turnaround programme, underlying profit before tax jumped by 57 per cent to also hit a record of Aus$1.53 billion.

Qantas, which handed bonuses to 25,000 workers, said it would pay a final dividend of seven Australian cents a share and buy back A$366 million of stock. Earnings before tax and one-time items surged 57 per cent to A$1.53 billion in the 12 months ended June 30.

The results were also boosted by the fall in global oil prices and a less competitive domestic market that has given the firm a stable base of earnings, the airline said.

Other international airlines such as Cathay Pacific, ANA and Japan Airlines have seen profits plunge amid intense competition from lower-cost rivals and as terrorism fears eat into demand.

Airlines' chief executive Alan Joyce, who has cut thousands of jobs, deferred aircraft orders and dropped unprofitable routes as part of a A$2 billion transformation programme, said the three-year plan was on course to exceed its target.

"We do see the strong performance of the company continuing. This business has taken a lot of cost out and improved revenue dramatically. The transformation programme has changed the business completely, delivering over Aus$1.66 billion in performance improvements. Our transformation programme is paying dividends for our shareholders, our customers and our employees," Joyce said.

"Our people can be incredibly proud of what they have achieved. It's thanks to their skill and commitment that we are announcing a record profit today. This was a true team performance, which shows that our strategy is the right one for the tough markets we are operating in," said Joyce.

"Transformation has made us a more agile business, created value for our shareholders and given us a platform to invest for the future. Qantas is stronger than ever, but we're also determined to keep changing and adapting so that we can succeed no matter what environment we're in," he said.

Emirates partnership
Two years ago, Emirates and Qantas entered into a revenue-sharing partnership that saw the Australian carrier end a 17-year relationship with British Airways and move its London-bound stop over from Singapore to Dubai. Under the agreement, Emirates gains access to around 50 points in Australia through Qantas' domestic network. In return, Qantas connects onto Emirates flights to more than 70 destinations across Europe, the Middle East and Africa.

Qantas shares closed 1.47 per cent higher at Aus$3.45 in Sydney trading.

Global ratings agency Standard & Poor's said the result had no immediate impact on Qantas' rating, which is currently at investment grade 'BBB-'. "Underpinning the credit rating is the airline's prudent financial policy framework that we view favourably against Australian corporate and global industry peers," S&P said in a statement.

The ratings agency downgraded Qantas to "junk" in December 2013 after the airline issued a shock profit warning and announced job losses, before lifting it from 'BB+' to 'BBB-' last November when earnings improved.

- issacjohn@khaleejtimes.com