Qantas forecasts up to 90% fall in full-year profit, stocks plunge
By Martin Parry, AFP
June 6, 2012, 11:33 am TWN
SYDNEY -- Australian flag carrier Qantas warned Tuesday its full-year profit could dive by up to 90 percent on the back of steep losses in its international arm, sending its share price plunging to all-time lows.
The airline said it expected underlying profit before tax — its preferred measure of financial performance — to be AU$50-100 million (US$49-98 million) in the year to June 30, compared with AU$552 million in the previous year.
In a statement to the stock market, the carrier blamed worsening global operating conditions driven by the European economic crisis and its highest ever fuel bill.
A soaring Australian dollar and a bitter battle with unions over wages and conditions that saw Chief Executive Alan Joyce ground the entire fleet for 48 hours in October also cost the airline dearly.
The warning saw the embattled company's shares plunge nearly 20 percent to an all-time low of AU$1.140 before closing down 18.6 percent at AU$1.155, on a day when the overall market ended higher.
Qantas's international business is expected to post a loss of over AU$450 million, more than double the loss of AU$216 million in the last financial year.
In contrast, its far healthier domestic unit and low-cost offshoot Jetstar are expected to book a combined profit exceeding AU$600 million.
"We remain focused on returning Qantas international to profitability in 2014 and for Qantas international and domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011," said Joyce.