Qantas shares nosedive after profit warning
QANTAS Airways yesterday warned of its first annual net loss since it was privatised in 1995, blaming deep losses at its international operations, weak travel demand and soaring fuel costs, sending its shares down by a fifth to a record low.
The forecast comes two weeks after the Australian airline unveiled a plan to separate its bleeding international business from its profitable domestic unit, and follows a bruising 12 months wrangling with unions that led to the grounding of its fleet for nearly two days last year.
Chief executive Alan Joyce, whose turnaround plan and handling of the unions has won shareholder plaudits, said the past few weeks had been particularly harsh, forcing the airline to warn investors.
Joyce said Qantas would post a net loss for 2011-12. He forecast underlying profit before tax would slide as much as 90 per cent to A$50m (£31.7m) to A$100m, while the airline will incur A$380m in restructuring costs – half the statutory level.
The latest underlying profit forecast compared with A$522m a year ago and was well below analysts’ expectations of A$285m.
“A very disappointing forecast. It just highlights the size of losses and problems with the international business and justifies Joyce’s move to split the group,” said David Liu, head of research at ATI Asset Management, which owns Qantas shares.
“Having said that, I take a lot of positives from the initiatives to cut costs, capex. It shows the management understands the macro economic environment and is doing everything it can to mitigate it.”