Qantas annual profit skyrockets to AU$1.53b

Qantas believes its underlying profit for the 2016 full year lays a solid foundation for the company to continue its transformation program.
Written by Aimee Chanthadavong, Contributor

Qantas has published strong financial results for the 12 months ended June 30, 2016, which it believes builds a foundation for the company to continue its investment in new technology, such as Wi-Fi, to drive new opportunities for the company during the 2017 financial year.

The company reported underlying profit increased by 57 percent to AU$1.53 billion, while statutory profit before tax was up 80 percent to AU$1.42 billion.

Meanwhile, transformation costs incurred during FY16 due to redundancy, restructuring, and other costs doubled from the previous financial from AU$91 million to AU$183 million.

Despite the increase in cost, the company reported that as it continues to progress in its transformation program, it has managed to unlock AU$1.66 billion in permanent cost and revenue benefits since early 2014, including AU$557 million during the 2016 financial year. By June 2017, Qantas said it expects to realise AU$2.1 billion in benefits.

Chief executive Alan Joyce pointed out that as part of the transformation, the company has invested in important areas such as aircraft, lounges, and technology.

"Today's result means we can build on those investments, with some really exciting projects in the pipeline to make the experience of flying with Qantas even better. Our plans for the Qantas Dreamliner, in particular, will set new standards for the industry."

Qantas said it is in the final stages of scoping options to extend Wi-Fi to its regional and international fleets.

Earlier this year, Qantas partnered with satellite communication service provider ViaSat to deliver free Wi-Fi service using the National Broadband Network (NBN) across its domestic fleets. Trials of the Wi-Fi service will begin in late 2016, with expectations that a full rollout to all domestic flights will take place in early 2017. This will mean passengers will be able to check their emails, use social media, and stream live sports, movies, and TV shows on board any domestic flight.

The group confirmed it is also exploring a partnership with Cricket Australia to live-stream cricket over the upcoming summer as part of the Wi-Fi trial.

"The technology we've chosen delivers speed up to 10 times faster than conventional on-board Wi-Fi -- and that will give our passengers a lot of options in how they spend their time on a flight," Joyce said.

Qantas' Loyalty division reported underlying earnings before interest and tax of AU$346 million, up 10 percent, and revenue increased by 6.7 percent to AU$1.6 billion.

During the year, Loyalty secured a share of Data Republic alongside Westpac and the National Australia Bank as part of a AU$10.5 million funding round for the data sharing platform firm.

The company also assured that to maintain the protection of the privacy of data, it is investing in cybersecurity to reduce the likelihood of outages and ensure early detection of any attacks.

Looking ahead, Joyce said the group expects to continue to maintain a strong financial position in the first half of the 2017 financial year, particularly as more cost benefits are achieved from the transformation program.

"We are focused on preserving high operating margins through the delivery of the Qantas Transformation program, careful capacity management, and the benefit of low fuel prices locked in through our hedging," he said.

"The long-term outlook for the group is positive, with clear strategic priorities and a robust financial framework to deliver for our customers, our people, and our shareholders."

Editorial standards