The Qantas Group’s profit update, published today, announced the airline expects to report an underlying profit before tax in the range of $50-$100 million for the financial year ending June 30, 2012.
The international arm of Qantas’ business, Qantas International, is expected to report an earnings before interest and tax loss of over $450 million in 2011-12 compared with $216 million in 2010-11.
Qantas said structural issues in the business have been compounded by the impact of global economic factors – including increased fuel costs, the high Australian dollar and weakness in the UK and Europe market – as well as the $100 million one-off cost of industrial action.
On the back of the announcement, the airline’s shares plunged to an all-time low of $1.16.
Qantas Group chief executive Alan Joyce said Qantas was attacking costs and allocating aircraft and capital efficiently to make improvements in the business.
“While there are one-off costs associated with the transformation program – in the range of $370- $380 million for the full year 2011-12, more than half of which are non-cash items – these costs will be outweighed by the long-term benefits of increased efficiency and competitiveness,” Joyce said in a statement.
“We continue to practise disciplined financial management. We have announced capital expenditure reductions totalling $900 million for 2012-13, bringing the total for the year down to $1.9 billion. Capital expenditure in 2013-14 will be at this level or lower.”
This article first appeared on SmartCompany.