Qantas soars back in to the black

Qantas will purchase eight Boeing 787-9s to replace its ageing 747 jumbo jets.

Qantas has turned around a massive loss to report its biggest profit since before the global financial crisis.

The airline reported earnings before tax and one-time items of A$975 million in the year to June 30, compared with a A$646 million loss a year earlier.

The airline attributes the spectacular turnaround to its successful transformation programme, which saw thousands of staff laid off and costs slashed, A$600 million in lower fuel costs helped by hedging, depreciation savings from international fleet impairment and higher revenue per available seat kilometre.

Alan Joyce. Photo / Dean Purcell

Chief executive Alan Joyce said the bounce back into the black was one of the most spectacular in Australian corporate history. There were record results for Jetstar, which was now making a profit in New Zealand, the airline's loyalty scheme and freight operations.

"This has combined to deliver the best first-half result in four years and the best second-half result in the company's history," Joyce said.

While no dividend was declared, Qantas announced it would return A$505 million to shareholders or 23c a share in October. It is also offering 28,000 staff a bonus that averages out at A$3000 a person for those who sign up to an 18-month wage freeze.

And it will purchase eight Boeing 787-9s to replace its ageing 747 jumbo jets, giving it more flexibility to open up new long-haul routes.

Qantas International was profitable on a full-year basis for the first time since the GFC, with underlying earnings of A$267 million - a turnaround of A$764 million from last year's result.

That business had been under attack from a surge of new airlines to Australia, particularly Middle Eastern carriers, but the falling Aussie dollar had made the country less attractive to foreign airlines.

The airline has added or announced capacity increases to Los Angeles, Dallas, Vancouver, San Francisco, Santiago, Tokyo and Singapore. It is also increasing transtasman capacity to meet seasonal demand and has announced plans to expand partnerships with American Airlines and China Eastern.

Qantas domestic reported underlying earnings of A$480 million, compared with A$30 million the previous financial year, as the capacity war with Virgin Australia cooled. Combined with Jetstar, the group made over A$600 million from its domestic operations. Jetstar Group reported record underlying earnings of A$230 million, up from a loss of A$116 million.

Qantas' net debt is down by A$1.1 billion since 2013. It did not give profit guidance for the coming year, but expected it to increase by 3 to 4 per cent in the first half of 2016.