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Qantas notes pressures domestically and internationally, yield decline of 2-3% in 1HFY0214 forecast

18-Oct-2013 1:07 PM

Qantas Group CEO Alan Joyce stated (18-Oct-2013) the group is "working on all fronts to build a stronger Qantas Group – one that can grow and succeed in the 21st century aviation industry". While noting that progress is being made amid tough market conditions and persistently high fuel prices, he said that "there is still a long way to go". He continued, "Our strategy is based on the clear evidence that global aviation is changing. It is changing rapidly, it is changing profoundly – and the changes cannot be reversed. The Asian Century means that the world’s centre of economic gravity is shifting to Australia’s region. New competitive forces and new airline partnerships are emerging. And technology is changing the way airlines do business and serve customers, from new aircraft types to mobile devices. All these trends present enormous opportunities for the Qantas Group. But we must act quickly and decisively to realise the opportunities. Because if we do not, others will". On the carrier's transformation plan, Mr Joyce said: "We are in the midst of our biggest transformation since Qantas was privatised in 1995. This transformation program has the goal of returning Qantas International to profit in financial year 2015 and ensuring that the Qantas airlines deliver sustainable returns over the long term". [more - original PR]

Qantas Airways: "We must be realistic about the challenges we face. A volatile economy. An uncertain exchange rate. High fuel prices. And intense competition on domestic and international routes.  We are a national carrier operating in one of the most liberalised aviation markets in the world.  And in the first half of financial year 2014, Group fuel costs will be a record for any half-year – a massive cost impact that will affect our international business in particular.  The domestic market is still absorbing capacity growth that has been double the long-run average. And this growth has come at the same time as weak underlying demand across the market, from the leisure to corporate segments. The Australian economy is in transition, affecting many of our corporate clients – from the mining sector to financial services. We are hopeful that the recent lift in business confidence will flow through to increased demand for travel, but there will be a lag effect. As a result of this weak underlying demand and competitive pressures both domestically and on international routes, we expect Group yields to decline in the first half of financial year 2014 by between 2 and 3 per cent compared to the first half of financial year 2013.  Given the high degree of volatility in the competitive environment, global economic conditions, fuel prices and exchange rates it is not possible to provide earnings guidance at this time.  There are many factors that we cannot control, and the immediate challenges they present are real. Yet for all the hurdles we face, we have many reasons to be optimistic," Alan Joyce, CEO. Source: Company statement, 18-Oct-2013.