Qantas Freight earnings in freefall
28 / 08 / 2014
THE SALE of road freight company Star Track Express amid ‘challenging global air cargo markets’ pushed down Qantas Freight’s (QF) earnings before tax and interest (EBIT) by more than a third in the financial year of 2014, writes Thelma Etim, deputy editor.
The Australian flag carrier’s cargo division recorded EBIT dropped to AUD24m (US$22.47m), compared with AUD36m ($33.70m) the previous year, says a company statement.
However, the integration of Australian Air Express with QF is now complete and “full run-rate benefits began to flow in the second half of FY14,” it adds.
Alan Joyce, chief executive of Qantas, described 2014 as ‘a year of unprecedented competitive pressure’, revealing the carrier suffered an underlying loss before tax of AUD646m ($604.77m).
“This underlying results reflects: the cumulative effect of two years of market capacity growth outstripping demand; a record high fuel cost of $4.5bn, up $253m on the prior year, and weaker demand due to an environment of lower consumer confidence, with reduced activity by business, particularly the mining and government sectors,” he observes in a statement.
"The statutory loss after tax of $2.8bn ($2.6bn) reflects the underlying loss andthe costs associated with our $2bn Qantas Transformation programme, including redundancies and early aircraft retirement, and a non-cash write-down of $2.6bn to the value of the Qantas International fleet, following our Structural Review.”
He went on to describe the numbers as ‘confronting’. But added that they “represent the year that is past and we have now come through the worst.”
The group accelerated the implementation of the Qantas Transformation programme, aimed at making the carrier leaner, more focused and sustainable.
It has led to significant redundancies – 2,500 have taken place so far.
By the end of 2015, 4,000 of the total 5,000 redundancies will have occurred.
Joyce adds: “The transformation of our business is a difficult process. We still have more to do, but we have come through the worst and we have clear evidence of a brighter future.
“We anticipate a rapid improvement in the group’s financial performance in financial year 2015 and – subject to factors outside our control – we expect to deliver an underlying profit before tax in the first half of the year.”
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