Qantas posts record profit, but shares hit by fuel cost worries

Qantas plans to launch the world’s longest non-stop commercial flight, from Sydney to London, by 2022. (Reuters)
Updated 23 August 2018
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Qantas posts record profit, but shares hit by fuel cost worries

  • The airline’s underlying pretax profit rose to A$1.60 billion for the 12 months ended June 30 from A$1.40 billion a year earlier
  • The airline plans to launch the world’s longest non-stop commercial flight, from Sydney to London, by 2022

SINGAPORE: Australia’s Qantas Airways posted a record annual profit, powered by its domestic business, but its shares fell on concerns about rising fuel prices despite the carrier saying it would be able to mitigate its impact.
Qantas forecast an A$690 million ($504.80 million) increase in its fuel bill for the current financial year but CEO Alan Joyce said the airline should be able to fully recover rising fuel costs in the domestic market and do so substantially in the international market.
Investors, however, were less sure. Shares fell as much as 7.7 percent in early trading, although losses narrowed to 2.4 percent by early afternoon after the management team reiterated the positive outlook on an analyst call.
Bank of America Merrill Lynch analysts, in a note, maintained their “buy” rating on the stock, telling clients the guidance supported their forecast of flat earnings in the current financial year versus a consensus estimate for a 6 percent fall.
The airline’s underlying pretax profit, its most closely watched measure, rose to A$1.60 billion for the 12 months ended June 30 from A$1.40 billion a year earlier. That was in line with analysts’ expectations. Australia’s flagship carrier also announced an A$332 million stock buyback program.
Separately, rival Air New Zealand Ltd. reported on Thursday its second-highest ever annual profit before tax but shares fell 3 percent after it said earnings would fall by as much as 21 percent in the current financial year due to higher fuel prices.
Qantas, which controls nearly two-thirds of Australia’s domestic capacity, said domestic underlying earnings before interest and taxes for Qantas and its low-cost arm Jetstar rose 25 percent for the year ended June 30 as they cut capacity and hiked fares.
CEO Joyce said forward booking revenue was running more than 6 percent higher than at the same time last year. He said Qantas would also increase revenue in its frequent flyer business.
Qantas expects to keep domestic capacity flat in the first half ending December 31 and for international capacity to rise by 1 percent. Joyce said demand remained strong, but the airline was focused on filling more seats rather than adding more capacity.
Under Joyce’s reign, Qantas has executed a successful turnaround that has cut costs and allowed it to return cash to shareholders, helping to push the airline’s shares to record highs. Qantas shares had risen 25 percent since the start of January before the results were announced.
The airline plans to launch the world’s longest non-stop commercial flight, from Sydney to London, by 2022 after starting Perth-London flights in March.
Joyce said the carrier was in talks with Airbus SE and Boeing Co. about ordering jets suitable for the mission and would make a decision next year, assuming it could also gain approval from regulators and its pilot workforce.


UAE gives 6,800 investors permanent residency under new ‘Golden Card’ system

Updated 49 min 37 sec ago
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UAE gives 6,800 investors permanent residency under new ‘Golden Card’ system

  • Permanent residency will be granted to foreign investors after they invest a combined $27 billion in the Gulf state
  • The UAE cabinet also approved providing renewable 10-year visas to foreigners with investments in the UAE of at least 10 million dirhams

DUBAI: The United Arab Emirates said on Tuesday it will grant 6,800 foreign investors permanent residency under a new “Golden Card” system after they invested a combined 100 billion dirhams ($27 billion) in the Gulf state.
Typically, foreigners have renewable visas valid for only a few years, often tied to employment, but the government announced plans last year to ease its visa policy.
“We launched a new ‘Golden Card’ system to grant permanent residency to investors and exceptional doctors, engineers, scientists and artists,” Sheikh Mohammed bin Rashid Al-Maktoum, the ruler of Dubai and the vice president and prime minister of the UAE, said in a tweet on Tuesday.
“The first batch of 6,800 investors with 100 billion dirhams worth of investments will be granted the ‘Golden Card.’“
In May last year the Gulf Arab state announced plans to grant long-term permits to investors, senior scientists and entrepreneurs, in an effort to support its economy and real estate market, which had been hurt by low oil prices, but had not mentioned the Golden Card.
Economic growth has slowed since a slump in oil prices in 2014 and white-collar professionals are seeing stagnant or even falling employment.
“The permanent residency ‘Golden Card’ will be granted to exceptional talents and everyone who positively contributes to the success story of the UAE,” Sheikh Mohammed said his tweet.
Last year, the UAE cabinet also approved providing renewable 10-year visas to foreigners with investments in the UAE of at least 10 million dirhams, if non-real estate assets account for at least 60 percent of the total. Investors can bring spouses and children into the country.
It also approved five-year residency to owners of UAE real estate worth at least 5 million dirhams.