SYDNEY: Qantas Airways is looking past its record annual loss and predicting blue skies ahead, as a landmark change in Australian laws opens the door to foreign investment in the airline’s international arm ‘“ its biggest headache.
A funding injection into its international division would allow Qantas to better compete on price and service offerings with rivals whom it says are bolstered by unlimited funding from wealthy state backers.
It would also support Qantas’ plans to re-configure its ageing fleet, invest resources in popular routes and further enlarge its global network, partly through its partnership with Emirates Airline.
Qantas yesterday said it expected to return to profit sometime in the current financial year. The surprisingly positive outlook gave the airline’s shares their largest one-day percentage gain in a year.
The so-called ‘Flying Kangaroo’ has been bruised by high fuel costs, a strong Australian dollar, increasing international competition, and a domestic price war with arch-rival Virgin Australia Holdings.
Qantas International has been the biggest drag on the airline’s earnings, with its loss for the year ended June 30 the largest among the carrier’s divisions and doubling from a year earlier.
Aviation experts also point the finger at chief executive Alan Joyce and his management team, criticising ill-fated moves such as the rollout of its low-cost Jetstar subsidiary in a crowded Asian market.
Joyce said that a record A$2.8 billion ($2.6bn) annual net loss and an underlying loss before tax of A$646 million were ‘unacceptable’, but vowed that ‘the worst is over.’
The headline loss was almost entirely due to a A$2.6bn non-cash writedown in the value of Qantas’ fleet as it restructured to take advantage of new domestic laws allowing greater foreign investment.