Australia’s Qantas Airways Limited (ASX:QAN) posted its biggest annual loss in the company's history, exceeding estimated losses for the year by nearly three times. However, the group also said that it will become profitable again in six months' time, sending its stock soaring.
Net losses for the year ended June 30 stood at 2.84 billion Australian dollars ($2.66 billion) and the company said that the record losses were mainly due to a 2.56 billion Australian dollars ($2.40 billion) non-cash write-down of its fleet. The airline also announced that its cost-cutting efforts would help the company return to profitability by December. In the past year, the company suffered from rising fuel prices and greater competition, which led to a 3 percent fall in revenues.
"There is no doubt today’s numbers are confronting, but they represent the year that is past," Alan Joyce, the company's CEO said, in a statement, adding: “We have now come through the worst."
“It has absolutely been the most challenging environment that we’ve faced, and the results, as I’ve said, have been confronting,” Joyce added at a media briefing, according to Bloomberg, adding: “This business will get back to profitability, subject to factors beyond our control.”
The group, which has reportedly posted a net profit for 18 consecutive years, also plans to reduce capital investment on planes for the next two years to 1.5 billion Australian dollars ($1.40 billion), Bloomberg reported. Only the carrier's domestic division made profits last year, while losses before interest, tax, and one-time items almost doubled to 497 million Australian dollars ($465 million) for Qantas International, which the parent group plans to split into a separate holding company.
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“We expect a rapid improvement in the Group’s financial performance – and a return to Underlying PBT profit in the first half of FY15, subject to factors outside our control," Joyce added, in the statement.
Sam Fimis, a private client adviser at Patersons Securities Ltd., said, according to Bloomberg, “They seem like they may have turned the corner,” adding that the company's statement about returning to profitability “gives traders and investors an excuse to have a look at the stock again.”
The airline's stock soared more than 6 percent on Thursday on the Australian Stock Exchange. Qantas, which is Australia's biggest airline company, was partly privatized in 1993.