Top Australian airline Qantas Airways Ltd on Wednesday posted a record annual profit and declared its first final dividend in eight years, as it reaped the benefits of a painful restructure undertaken in the face of fierce global competition.
The result vindicates Chief Executive Officer Alan Joyce who has faced sometimes bitter criticism from shareholders, passengers and employees since undertaking the costly shakeup of the so-called “flying kangaroo” two years ago.
Under his watch, the company has shed thousands of staff, taken billions of dollars in writedowns, withheld dividends, cut flights to keep ticket prices up and locked in fuel hedging contracts that let it benefit from a slump in the oil price.
“We are confident about our ability to navigate through all market conditions in the short term and we are hugely excited about our opportunities over the long term,” Joyce told reporters on Wednesday.
Pre-tax profit, Qantas’s most closely watched measure, totaled A$1.42 billion ($1.08 billion) for the year to June 30, almost double the previous year’s A$789 million result. Even so, it fell short of analysts’ forecasts of about A$1.6 billion.
In a sign of how much the airline is relying on cost-cutting to grow profit, sales grew just 3 percent while fuel costs shrank by 17 percent, or A$664 million.
Each of the company’s main operating divisions – its domestic, international and discount carrier units, and its frequent flyer programme – posted record underlying earnings.
Qantas shares rose as much as 5 percent in a flat overall market, hitting their highest intraday level since April, as investors welcomed a return to dividends and the benefits of a share buyback. The stock has tripled in two years.
“Most of the companies that have released their results haven’t done that well so Qantas is the standout, and the market’s responded,” said Steven Daghlian, an analyst at Commonwealth Securities, which has a 5.7 percent stake in Qantas.
Airlines, booking agencies and other travel-related sectors have been hammered by intense competition and uncertainty over issues like Britain’s vote to leave the European Union and the US presidential election.
Qantas’s smaller domestic rival Virgin Australia Ltd said last month its full-year net loss more doubled.
Qantas declared a final dividend of 7 cents per share, its first such payment since 2008, and said it would buy back A$366 million of shares, a measure to boost the share price.
After angering unions with job cuts, Qantas promised up to 25,000 staff a A$3,000 bonus.
($1 = 1.3137 Australian dollars)