Emirates partner Qantas returns to profitability thanks to cost-cutting and low fuel prices

Australia’s Qantas, a partner of Emirates, is expanding its fleet and returning A$505 million (Dh1.4 billion) to shareholders after returning to profitability for the first time since 2008.

Qantas would buy eight long-haul and wide-bodied Boeing 787-9 Dreamliners that would join its fleet from 2017 and gradually replace five Boeing 747s, the airline said yesterday.

The new aircraft will allow Qantas to operate longer haul flights and cut fuel costs.

Thanks to a US$2 billion cost-cutting scheme, Qantas achieved underlying pre-tax profit of A$975m for the financial year that ended on June 30, from a loss of A$646m a year earlier.

Qantas also repaid A$1 billion in net debt as part of the cost-cutting programme.

The airline also cited positive factors such as lower fuel prices, depreciation savings from the Qantas International fleet impairment, higher revenue per available seat kilometre (excluding foreign exchange), and the repeal of the carbon tax.

In 2013, the airline announced plans to cut costs over the next three years through a series of measures that included axing 5,000 jobs and reducing its fleet by more than 50 aircraft.

For the first half of its new financial year, Qantas plans to boost capacity by between 3 and 4 per cent.

The capacity expansions enacted or announced are in markets such as Los Angeles, Dallas, Vancouver, San Francisco, Santiago, Tokyo and Singapore.

Qantas also plans to expand its partnerships with American Airlines and China Eastern, subject to regulatory approval.

Howard Wheeldon, an aviation analyst at London-based Wheeldon Strategic Advisory, said there was room for Qantas to further improve its financial performance.

“With a relatively unstable financial history over the past 20 years, plus the fact that apart from benefitting from reduced headcount and other cost-related saving measures, the bulk of operating performance improvement last year seemingly came from lower fuel costs. Perhaps we should not sing the praises of the latest results too much,” he said.


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