Qantas Airways has admitted its full-year profit for 2005/06 will be at the lower end of analysts’ forecasts.
CEO Geoff Dixon said at this stage, after restructuring costs of approximately $153 million, the profit before tax would be around $670 million.
Analysts had forecast between $670 million and $895 million.
“We have advised the market since reporting a 2004/05 profit before tax of $914.3 million (adjusted for Australian equivalents to International Financial Reporting Standards) that we would not achieve the same level of profitability in 2005/06,” he said.
“This position has been reinforced by a $1 billion increase in fuel costs for 2005/06 after hedging, a significant amount of which will not be recovered by surcharges.”
Dixon said Qantas had also decided not to sell its catering operations, the expected proceeds of which had been included in its 2005/06 forecast.
“The offers we received did not represent good value compared to the benefits we expect to achieve by retaining the business and restructuring it,” he
said.
Dixon said Qantas was making solid progress towards its target of $3 billion of benefits through Sustainable Future for the five years to June 2008.
“These reforms will lead to an improved cost structure in future years. However, if fuel prices continue at this level, further restructuring will be required,” he said.
By Bev Fearis
