12 August 2010

Qantas can thank its frequent flyers

Qantas is looking at opportunities to expand its low-cost subsidiary Jetstar's operations in China.

Jetstar's Asia business grew capacity by 46 percent in the region in the financial year 2010, CEO Alan Joyce said at the release of the Qantas groupÃ¢â¬â¢s full year financial results.

Qantas announced a 4.3 percent drop in full-year net profits but said conditions were improving as the industry recovers from its battering in the financial crisis.

QantasÃ¢â¬â¢s traditional airline business contributed just $17 million of its $110 million pre-tax profit for the second half as heavy discounting continued to impact its earnings. Ã¢â¬~¨

Qantas's profits continue to come from its Frequent Flyer business. The division posted an underlying pre-tax profit of $171 million in the second half as its membership base increased to 7.1 million.
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Overall, Qantas Ã¢â¬~¨net profits were $112m, down from $117m a year earlier, while underlying pre-tax profits rose three-fold to $377m after last year's cost-cutting exercise.

Joyce said all sectors of the group, including budget offshoot Jetstar, were profitable, and that the company expects to increase capacity in the first half of next year. Ã¢â¬~¨Ã¢â¬~¨

But Qantas did not pay a dividend to shareholders for the second year running, and declined to forecast future profits "given the volatility and uncertainty of the aviation market". Ã¢â¬~¨Ã¢â¬~¨