Qantas shares shoot skyward

SYDNEY - Shares in Qantas Airways shot sharply higher yesterday after Australia's dominant carrier said it expected to top its forecast pre-tax profit of $A550 million ($635 million) for the 2001-2002 year by more than 10 per cent.

"This improved result was due to a range of factors, including a faster recovery in the international aviation market, a solid domestic performance and improved overall productivity," chief executive Geoff Dixon said.

From trading down 1Ac at $A4.36 just before the announcement, Qantas shares raced to $A4.65, their highest in nearly a month and a 6.4 per cent gain on the day, in a softer overall market. The shares closed up 4.4 per cent at A$4.56.

Mr Dixon said main drivers of the improved productivity included more efficient aircraft in its domestic fleet, the Cityflyer shuttle service, lower sale costs due to higher internet bookings, and reduced overhead costs due to improved economies of scale.

Qantas has taken over 85 per cent of the A$10 billion Australian aviation market since the demise of former second-ranked carrier Ansett Airlines in September 2001.

Its remaining competitor on capital city routes is the Virgin Blue discount carrier, 50 per cent owned by British entrepreneur Richard Branson and 50 per cent by Australian logistics group Patrick Corp.

Dixon said capital expenditure - the airline has ordered new planes to cater for the dramatically improved market share - would hit profit from 2002 to 2003.

"The results for the 2001-2002 year would provide a solid foundation for 2002-2003 when the company's major capital expenditure programme would begin to impact," he said.

For the four years to 2005, Qantas would invest an average of $A2.5 billion each year on aircraft, upgraded lounges and improved facilities such as inflight entertainment and international sleeper beds.

Analysts forecast a net profit before one-off items for the 2001-2002 year of $A385 million with a range of $A370 million to $A419 million.