Qantas, Virgin Australia both tip return to profit by year's end

By David Flynn, November 21 2014

Less than six months after recording Australia's largest-ever losses in the airline industry, Qantas and Virgin Australia both expect to deliver a profit by the end of this year.

The forecast is a measured one based on 'underlying profit' excluding one-off charges, and neither airline is declaring how large (or small) the numbers might be.

But it's a far cry from the end of August 2014, when Qantas stunned the nation with a loss of $2.83 billion over the 2013-2014 financial year while Virgin Australia took a $355 million hit for the same period.

Both of those dramatic figures contained one-off costs which when removed from the equation saw the total combined losses trimmed to some $827 million.

Read: Why Qantas' $2.8 billion loss isn't such a scary number

However, Qantas and Virgin Australia say the tide of red ink is turning.

Speaking at this week's Virgin Australia annual general meeting, CEO John Borghetti confirmed the airline expected to report an underlying profit for the October-December 2014 quarter.

“It has been a very tough period over the past couple of years" Borghetti noted, but added that "we are coming out the other side and there are signs conditions are moderating."

"While it is difficult to give guidance... we expect to deliver underlying profit in the second quarter of 2015."

Qantas Group CEO Alan Joyce also says the airline is "on track to deliver an underlying profit for the first half of the (2014-2015) financial year."

In the airline's favour are early returns on the wide-ranging $2 billion cost cutting program and improved passenger numbers and yield, along with fewer seats in the skies following a truce in the damaging 'capacity war' between Qantas and Virgin Australia.

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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.

Virgin Australia - Velocity Rewards

06 Aug 2014

Total posts 20

Alan Joyce is absolutely deluded if he honestly believes that Qantas will return a profit by the end of the yr. Seriously , this idiot is so out of touch with reality, that Qantas is the laughing stock of international aviation. Shareholders &.the board and the government should have sent this clown packing yrs ago. How much more is it going to take & how much more damage will he do to the industry in the meantime????

QFF

16 Aug 2014

Total posts 1

Love him or hate him, Alan Joyce has managed to steer Qantas through very difficult times for the Airline. Qantas would buy their fuel in US$ so a fall in the exchange rate from its peak of around A$1.10 to around A$0.87 would reduce fuel costs by around 20%. That is a huge saving for the international side of Qantas and feed directly into improving the bottom line. 

Lets not forget that most of the last reported loss was on paper and had no effect of cash preservation or cash flow.

Qantas - Qantas Frequent Flyer

31 Aug 2012

Total posts 194

Interesting. There is a lot of comment regarding  oil/fuel prices in the FFA site Comments today. The 'experts' there say (even without currency fluctuations taken into account) that there is no likelihood of significant fuel price reductions as price hedging (bad bet as it turns out) is stopping much lower production prices being passed on. Go figure!

QFF Gold QC gold

26 Nov 2012

Total posts 56

You've gotta give it to Qantas. They copped it from Virgin and lost a lot of blood but managed to survive. Will be interesting to see what market share they have after the dust settles. If they managed to maintain their market share then love 'em or hate 'em they have shown how agressive they can be. Not good for competition and choice for Australia which has been the case for some time now.

Emirates Airlines - Skywards

14 Feb 2014

Total posts 32

Poor Steve,can a person on this website express their dislike of qantas without the "qantas can do no wrong" brigade giving thumbs down i mean get a grip people its nowhere near a great airline it used to be and its because of people like you not wanting more and expecting better that they have just continued to charge a lot of money and offered not much, thank god that most of this country has opened their eyes to other offerings, i do not care what country airline belongs to as long as they do right by their passengers and Qantas is not one of those airlines yet.


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