"Unprecedented" decline in demand - Joyce
Qantas has today (Aug 19) blamed a sharp drop in full-year profits on "unprecedented and significant shifts" in demand.
The group, including low cost subsidiary Jetstar Airways, reported pre-tax profits of AUD$181m (€105m) in the year to June 30, down 87% year-on-year.
Net profit after tax came in at AUD$123m (€71.5m) as weakened domestic and long haul demand led to a 4.3% drop in yields.
Qantas' ceo Alan Joyce said the year was one of "two contrasting halves".
"The first half of the year was characterised by a generally favourable operating environment and strong demand," Mr Joyce said.
"During the second half, the environment deteriorated, with domestic and international competitor capacity continuing to grow and demand in key markets softening quickly as the global slowdown hit."
Mr Joyce also blamed strike action, the outbreak of swine flu and the cost of bringing Qantas' A380s into service for the slump in profits.
Mr Joyce added that the group had "moved quickly and decisively to address these unprecedented circumstances" by cutting capacity, capital expenditure and other costs.
Qantas said capacity cuts of 1.9% across the group had resulted in changes in operating costs and lower reveneues.
But the group said its budget carrier Jetstar had increased capacity through growth in its network.
Strike action by the Australian Licenced Aircraft Engineers Association was estimated to have cost Qantas AUD$130m (€76m) in lost revenue and other expenses.
The impact of swine flu and the introduction of the A380 last year cost an estimated AUD$45m (€26m) and AUD$37m (€22m), Qantas said.
Qantas said it had taken "significant steps" to strengthen its balance sheet with an additional AUD$1.1bn (€640m) in financing for future aircraft.
The group said a further AUD$500m (€291m) "undrawn stand-by facility" would help it weather the coming financial year and take advantage of economic recovery.
Qantas was unable to give guidance on future profits but said there were signs of improvement in passenger volumes and stabilising yields.