Qantas declares 2004-2005 net profit of US$580.66m, up 18pc

AUSTRALIAN flag carrier Qantas announced a net profit of A$763.6 million (US$580.66 million) for the year ended June 30, up 17.8 per cent over the same period in the previous year.



Qantas announced for the second consecutive year a one-off cash bonus of A$1,000 for all eligible non-executive employees.



Margaret Jackson, chairman of Qantas, said the record result was a credit to Qantas staff and management. "The company responded extremely well to ever-increasing competition, rapidly escalating oil prices and the heightened security environment," she said.



Ms Jackson said she was pleased that a sub-committee of senior Cabinet ministers would be reviewing Australia's aviation policy settings.



"Clear policy decisions and guidelines from the government's deliberations will better enable Qantas to prepare for the future. Qantas is one of the most competitive airlines in the world, but this competitiveness can easily be eroded by the distortions inflicted on global aviation by widespread government ownership, subsidies and guarantees. What is needed are policies that understand and, where possible, take into account these distortions," Ms Jackson said.



The chief executive officer of Qantas, Geoff Dixon, said fuel represented the greatest challenge for Qantas in the coming 24 months.



"Fuel in 2004-05 was 19 per cent of our total operating costs, up from around 15 per cent in 2003-04. It will increase to almost 30 per cent of our total operating costs in 2005-06," he warned.



Mr Dixon said the main drivers of the 2004-05 result were the successful introduction of the value based domestic carrier Jetstar that provided Qantas with strong competitive business models in all sections of the domestic market - full service, low cost and regional.



Also an improvement in yields, excluding the unfavourable impact of foreign exchange rate movements, of two per cent helped the result.



Mr Dixon said Qantas' success in recent years had been achieved by growing all its flying segments, while using that growth as the catalyst for substantially reducing unit costs.



He said Qantas would base its growth in the next 12 months on new international markets, while expanding existing profitable markets, on substantially increasing freight revenues and on expanding the Jetstar brand.



"Jetstar has been a marked success and lowered its cost base in the second half of the year to 7.62 cents per ASK, making it the lowest cost carrier in Australia, even with a mixed fleet. As additional A320s are introduced to the fleet, we expect Jetstar's cost advantage over the competition to increase further, giving it an enviable position from which to grow both in Australia and internationally," Mr Dixon said.



He said that despite the airline's good performance in the domestic market, there was no room for complacency. "Competition in the domestic market will increase, with the start-up of new carrier OzJet later in the year and Virgin Blue's stated intention of seeking a much larger share of business traffic."



He said the significant growth in capacity was well ahead of demand by other international airlines would continue to remain a challenge.



"Qantas International has handled this competitive pressure, increasing capacity by 8.9 per cent over the year as four new A330-300 aircraft came into service, and investing in new markets in China and India," he said.