SYDNEY (AFP) – Embattled Australian carrier Qantas said Monday it had turned the corner after a major shake-up to stem losses, forecasting a swing back into the black in upbeat half-year profit guidance that sent its shares soaring.
Record fuel costs and fierce competition saw the carrier post an underlying loss before tax – its preferred measure of financial performance – of Aus$252 million (US$209 million) in the six months to December 31, 2013.
But in a market update, Qantas said it expected an underlying profit of between Aus$300 million and Aus$350 million in the same six months this year.
The company gave no guidance on a net profit basis, but the news propelled its share price to its highest in almost four years, surging 13.8 per cent to close at Aus$2.39.
Chief executive Alan Joyce said the upbeat numbers were driven by tumbling oil prices and an aggressive cost-cutting campaign, with the firm embarking on a Aus$2 billion transformation programme 12 months ago.
“Today we confirm that Qantas is set to report its best first half result since 2010,” Joyce said.
“This demonstrates that the strategy we have outlined to transform our business is working.
“This is an improvement of over Aus$550 million compared with the first half last year, with Qantas Transformation being the primary driver of the turnaround.”
The company, which is due to report its interim result on February 26, said all areas of the business, including its ailing international division, were expected to be profitable in the first half of the fiscal year.
It comes on the heels of a cost-cutting drive that has seen thousands of jobs axed, aircraft deliveries deferred and growth at Asian offshoot Jetstar frozen.
The carrier has also benefited from lower jet fuel prices, which are expected to add Aus$30 million to the bottom line during the six-month period.
Morningstar analyst Daniel Mueller said Qantas was enjoying strong market momentum.
“I think the market tends to follow the momentum; when things are going well the share price goes up,” he said. “But Qantas over the long term can be very volatile, so I think it is important to look through that and take a more normalised view of the business.”