Qantas: We’re doing okay, thanks
SYDNEY: Qantas has responded to growing investor dissatisfaction about the carrier’s current outlook disclosure leading up to the proposed private equity buyout by Airline Partners Australia.
In a statement issued today, Qantas said it anticipated that the full year result for 2007 would be around 30 to 40 per cent higher than last year’s result and that it would be “towards the upper end of this range”.
“This expectation is based on continuing strong demand and yields offsetting cost reduction targets which have not been fully realised in the Engineering and Airport Divisions.”
Qantas said it was aware that there is a broad range of analyst profit before tax estimates for the year ended 30 June 2008, ranging from approximately $975m to approximately $1.5bn with an average of approximately $1.23bn.
“In response to market speculation and queries received from investors, Qantas confirms its outlook expectations for 2008 are in line with average analyst consensus PBT estimates of approximately $1.23bn.”
Qantas said it had yet to assess the impact of, or include any provision in its estimates at this time, in relation to the following:
-The recently announced intention of Tiger Airways to commence services in Australia from late 2007.
-Virgin Blue’s deployment of additional capacity through new Embraer jet aircraft and plans underway for the Qantas Group to secure additional aircraft to meet the new competition and to sustain its market share position within Australia.
“These developments are likely to have a negative financial impact on Qantas in 2008. Until we know more about pricing, capacity and schedules, we are not in a position to quantify this impact.”
-Contingent liabilities relating to Qantas’ involvement in alleged price fixing in the air cargo market and other contingent liabilities referred to in the interim results released on 8 February 2007.
“Qantas does not believe it is possible to quantify any direct or
indirect liabilities associated with these matters at this time, but it is possible that they may be significant.
“Just as for the 2007 full year outlook, Qantas’ 2008 outlook is subject to fuel costs not increasing significantly, demand continuing to grow and the continued success of the Sustainable Future Program in achieving cost savings.”
The statement said Qantas has hedged 50 per cent of anticipated crude oil requirements for the 2008 financial year at a worst case rate of $US69.64 a barrel for West Texas Intermediate crude.
Ian Jarrett
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