Qantas has posted an interim net profit slide to $445 million, blaming the 3.9 per cent drop on protests in Hong Kong, higher foreign exchange costs and slower global freight demand.
The coronavirus outbreak in the second half has added to Qantas’ woes and is expected to cut $100 million to 150 million off its bottom line.
The carrier has responded to the drop in demand by slashing flights to Asia by 15 per cent until the end of May and bringing forward a Beijing exit.
With less demand from corporate and leisure, it is also will reducing capacity by 2.3 per cent.
The group says its first-half net profit of $445 million, compared with $463 million at the same time last year, came after a $119 million impact.
That was from protests in Hong Kong, subdued demand in global freight markets and other increases in costs associated with foreign exchange rates on non-fuel costs.
Qantas also faced an extra $55 million in operating costs after selling domestic airport terminals.
After all that, though, the underlying profit was $771 million, or just 0.5 per cent down on $775 million in the prior corresponding period.
However, chief executive Alan Joyce says Qantas fundamentals remain strong, with interim revenue 2.8 per cent higher this financial at $9.5 billion
“In the domestic market we dealt with some travel demand weakness and a structural change in our overheads from the sale of domestic terminals. Fundamentally, Qantas and Jetstar both did well,” Mr Joyce said.
“Internationally, the growth in passenger revenue outweighed the impact of disruption in Hong Kong and a freight market affected by trade wars.”
He said the ultra-long haul routes such as Perth to London continue to perform extremely well and the loyalty program achieved another record result.
The carrier announced an off-market share buyback of up to $150 million.
It will pay shareholders a fully franked interim dividend of 13.5 cents to the tune of $201 million.
QANTAS HI HIT BY HONG KONG PROTESTS
* Net profit down 3.9pct to $445m
* Revenue up 2.8pct to $9.5b
* Interim dividend 13.5 cents, fully franked, up 12.5 per cent.