$3.3B QANTAS TURNAROUND A DOUBLE BONUS FOR INVESTORS
Written on the 20 August 2015 by Jenna Rathbone
IT'S been labelled by CEO Alan Joyce as one of the biggest corporate turnarounds in Australia's history, and Qantas shareholders are clearly the big winners.
Those that stuck with the airline over the past year will have seen their shares almost triple in value to about $3.80, and now they are about to get their first taste of a payout from the company in six years through a 23c-a-share capital return.
Qantas has recorded its strongest profit since before the global financial crisis, turning a $2.8 billion bottom-line loss in FY14 into a $560 million net profit in the 12 months to the end of June.
But it is the pre-tax underlying profit that emphatically brings home the airline's recovery, which has been buoyed by a difficult and controversial corporate restructuring and lower fuel costs.
Underlying profit before tax of $975 million, the best result since 2008, compares with a loss of $646 million a year ago.
Following the result, Qantas has announced it will return $505 million, or 23c a share, to shareholders in November.
While no dividend has been declared, and while Joyce says more work needs to be done, the company has opened the door for Qantas to resume dividend payments which were suspended in the second half of the FY09.
"Every segment is now making a healthy profit, with returns exceeding cost of capital, including record results for Jetstar, Qantas Loyalty and Qantas Freight," says Joyce.
"This has combined to deliver the best first-half result in four years and the best second half result in the company's history."
Revenue in FY15 rose 3 per cent to $15.8 billion.
Qantas says the driving force behind the result was the progress of its Qantas Transformation program, which realised close to $900 million in transformation benefits during the year and saw
Qantas meet its target of paying down $1 billion in net debt.
It says other factors include lower fuel prices, depreciation savings from the Qantas International fleet impairment, higher revenue per available seat kilometre, and the removal of the carbon tax.
Meanwhile, Qantas has placed an order for a new fleet of Boeing 787-9 Dreamliners for its long-haul fleet, to be delivered from 2017.
Joyce says the "milestone" acquisition of the next-generation Dreamliner signals a new phase of renewal and growth.
"We are halfway through the biggest and fastest transformation in our history," says Joyce.
"Without that transformation, we would not be reporting this strong profit, recommencing shareholder returns, or announcing our ultra-efficient Dreamliner fleet for Qantas International.
"We have reshaped our business for a strong, sustainable future, and because we moved quickly and made tough decisions early, we have strong foundations to build on."
The positive result will also see staff of Qantas rewarded with a $90 million one-off bonus for EBA employees who agreed to an 18-month pay freeze.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter