Qantas reveals $2.83 billion loss

By David Flynn, August 28 2014

  • Qantas reports record $2.83 billion loss
  • Jetstar posts first loss, $116 million
  • Qantas domestic, international arms to split

Qantas has revealed a loss of $2.83 billion over the 2013-2014 financial year, although the figure is blown out by a $2.6 billion write-down for the airline's international fleet plus other one-off costs associated with redundancies.

Once those numbers are taken into account, Qantas' underlying loss is clawed back to a far less frightening – and certainly more manageable – $646 million.

Qantas' low-cost sibling Jetstar has not escaped its share of the pain, with the Jetstar Group losing $116 million before tax this year.

It's a shift in fortunes for the low-cost carrier, with profits down over a quarter of a billion dollars following last year’s earnings before tax profit of $138 million.

"There’s no doubt that today’s numbers are confronting. But they represent the year that is past, and we have now come through the worst," said Qantas Group CEO Alan Joyce.

"We therefore anticipate a rapid improvement in the Group’s financial performance in financial year 2015."

Despite the flowing red ink, Qantas Loyalty – the jewel in the Qantas Group's crown that includes Qantas Frequent Flyer – is not for sale.

"After careful consideration our judgement was that Qantas Loyalty continued to offer major profitable growth opportunities, and there was insufficient justification for a partial sale," Joyce said.

The first five aircraft of Qantas 50-strong Boeing 787-9 Dreamliner order will also be deferred from 2016 to 2017.

Qantas is also set to split its domestic and international arms to enable what CEO Alan Joyce calls "future investment around the international business".

The Red Roo is now entering the second year of an ambitious three-year ‘transformation program’ intended to carve out $2 billion dollars in costs by mid-2017 – a program which Qantas has said will come with its own $500 million bill.

This will include around 2,800 redundancies on top of the 2,200 jobs lost in the previous year.

Follow Australian Business Traveller on Twitter – we're @AusBT

David

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.

Qantas - Qantas Frequent Flyer

18 May 2011

Total posts 220

This line from the end of their statement is interesting:

The Group expects a return to an Underlying Profit Before Tax in the first half of FY15, subject to factors outside its control. 

Sounds like they don't feel as though they are in charge of their destiny.

Qantas - Qantas Frequent Flyer

30 May 2013

Total posts 304

How can Alan Joyce and indeed the whole Board of Qantas honestly feel that they deserve to be in their positions any longer? The whole Emirates deal that was meant to help save Qantas has proven to be a flop. I love Qantas, but I won't be flying to Europe with them through the United Arab Emirates. I worry that it won't be long until Qantas only has only one or even zero flights to London. It wasn't that long ago they serviced Europe with five daily flights. Bring the Kangaroo route back through Singapore. Return to the PER-SIN route. Return to Frankfurt and INVEST in some fuel efficient aircraft. Qantas needs to come back into the black by growing - not shrinking its way back into profitability.

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

You are quite correct to question if this man and his board should be at the helm of this company. Year upon year of losses which are now quite unsustainable, an ill conceived airline alliance with EK, abandonment of international customers unless you live in SYD or MEL. Erosion of flights to Europe. This is on top of ongoing losses including years where the company was paid compensation from Rolls  Royce and Boeing!  AJ has to fall on his sword.  He is not delivering to his customers or his shareholders.  AJ, in the name of god, go.

Qantas - Qantas Frequent Flyer

28 Aug 2014

Total posts 213

Most of the losses are on paper only, so the headline loss of $2.83 billion being hysterically splashed across the news today is a bit misleading for your average punter that doesn't understand such accounting practices.

That being said though, in the same duration as Alan Joyce's term as CEO, Cathay made $3.8 billion profit. How has Qantas fared by comparison?

And while we're pondering that, remember that Alan Joyce's FY12-13 remuneration package of $5.1 million matched the COMBINED salaries of the CEO's of Cathay Pacific, Singapore, and Air New Zealand.

Hmmm...

05 Jul 2012

Total posts 13

One word - "wages".  Let's just accept that everything in Australia is hideously expensive because our wages are at least double what our competitors are paying their staff.  The archaic requirement to pay penalty rates for weekend or public holiday work is utterly ridiculous.  Oh to be an atheist waiter on Christmas Day....

Qantas - Qantas Frequent Flyer

17 Aug 2012

Total posts 2221

Indeed! But sad to say, look at this line here:

Qantas: $646m loss 'less than expected'

It doesn't quite have the same ring as this one:

QANTAS: $2.83 BILLION BLOWOUT!!!!!11

I fully expect this to be this evening's shocker in the mX. I must thank AusBT for sensible journalism with regard to this matter.

Cathay Pacific - The Marco Polo Club

19 Apr 2014

Total posts 46

Qantas has inflicted this onto themselves 

  • Why can't they stop giving their newer, more efficient fleet to their low cost subsidiary Jetstar?
  • Why can't they realise that QC and QFF members are already being offered the short end of the stick?
  • Why can't they compete in routes that other airlines have been thriving in, even with a lower quality product (*referring specially to AKL here*)
  • And lastly why don't they have a solid agenda in terms of routes, fleet or service?

"higher fuel costs" and "increased competition" don't justify the results, especially after record profits just 4 years prior. (Also great job on negating the one-off losses AUSBT. Really great article David.)


$646 million loss is more managable, perhaps. But certainly not any more desirable.

Qantas - Qantas Frequent Flyer

03 Jul 2011

Total posts 180

So are we going back to TAA for domestic and QF fir international. Out of interest, it hasn't made the news here in HK. But I wondered, did any arm of the QF group make money? 

Qantas - Qantas Frequent Flyer

28 Aug 2014

Total posts 213

The three most profitable segments:

Qantas Loyalty - $286m

Qantas Domestic - $30m

Qantas Freight - $24m

The three most unprofitable segments:

Qantas International - ($497m)

Corporate - ($168m)

JetStar Group - ($116m)

Cathay Pacific - Asia Miles

27 Nov 2012

Total posts 41

I hope that QF doesn't split their domestic/international divisions; it will mean more top heavy management, and these are the staff that QF should have targeted ages ago, so until they eradicate these over paid, and under acheivers  in their senior management, they will never succeed in fulfilling A. J.' s plans for returning to profit. I feel that the Board is the main fault for QF's woes, and A.J. Is their scapegoat.


Hi Guest, join in the discussion on Qantas reveals $2.83 billion loss