Australian flag carrier Qantas has reported an Underlying Profit Before Tax of $771 million and a Statutory Profit Before Tax of $648 million despite being impacted severely by the Coronavirus outbreak.
The results were similar to those of last year, with the Underlying result coming in at $4 million less in comparison to last year. Qantas notes that the weakened results came as costs rose: $51 million in higher foreign exchange related cost impacts, $68 million in global freight weakness and disruption in Hong Kong, and a $55 million increase in operating costs from the sale of domestic airport terminals.
Based on the almost $170 million in ‘headwinds and cost-ups,’ CEO Alan Joyce said the results demonstrated “the combined strength of the Group and the confidence we have in it”.
The airport costs mainly impacted the domestic sector of the group. Despite this, Alan Joyce says Qantas retained its position with the market and grew at a steady rate.
“Qantas maintained its domestic market lead in corporate and premium leisure travel. It kept growing its share of travel by small-to-medium enterprises, and the resources sector also grew,” the CEO said.
Meanwhile Jetstar faced some major headwind after being impacted severely by industrial action. While the carrier continued to grow its ancillary revenue and offer low fares, the industrial action hit them hard.
“We’re offering 3 per cent a year, which is above inflation and above what most companies are offering,” Alan Joyce said.
Joyce continued: “No amount of industrial action will change our stance, because we can’t afford to lose our discipline on costs.”
Meanwhile, the coronavirus has hit most airlines hard. This includes Qantas, who estimate the impact for FY20 to be an Underlying EBIT of between $100 million and $150 million based on weakened travel demand, capacity decreases and lower fuel costs.
In response to the coronavirus outbreak, the Qantas Group has reduced capacity to Asia by 15% until at least the end of May. The carrier says it will continue to monitor and adjust operations when needed to mitigate the virus’ impact on second half earnings.