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AFTER months of protesting about tough trading conditions, Qantas has underlined that it is still one of the most profitable airlines in the world by more than doubling its annual profit.

 

But Qantas chief executive Alan Joyce said the ''good result'' should not be an excuse to stop pushing ahead with a major shake-up of its international operations, including setting up a premium airline in Asia.

 

The company will continue to increase operations in its less heavily unionised business, low-cost offshoot Jetstar, as it shifts its centre of gravity closer to Asia. While Qantas's seat capacity will be boosted by just 4 per cent in the first half, Jetstar will grow by 19 per cent. The bulk of Jetstar's growth will be on international routes in Asia.

 

Qantas more than doubled its net profit to $249 million for the year to June, which it attributed to the performance of its domestic, Frequent Flyer and Jetstar operations. Underlying pre-tax profit rose 46 per cent to $552 million, which was better than market expectations.

 

It did not declare a final dividend.

 

The bottom-line result was achieved despite an ash cloud in June halting services and natural disasters such as the Queensland floods and Japanese and New Zealand earthquakes.

 

The events ripped $224 million from the company's bottom line, although this was partly offset by a $95 million settlement with Rolls-Royce after the grounding of Qantas's A380 fleet late last year.

 

Qantas shares fell 2¢ to $1.52 yesterday as some analysts said a change to the treatment in the accounts of maintenance costs for operating leased aircraft detracted from the bottom-line profit.

 

Qantas has not given earnings guidance for this financial year because of volatility in global markets, fuel prices and exchange rates, as well as the prospect of industrial action.

 

With Qantas embarking on arguably the biggest shake-up in its 90-year history, management has been accused of overstating the losses of Qantas's premium international operation. The company has put the losses at $200 million last financial year, but the airline's long-haul pilots and independent senator Nick Xenophon say Qantas is covering some of Jetstar's costs.

 

Mr Joyce said the claims of cost-shifting were ''in line with the moon-landing conspiracy theory that we didn't land on the moon''. He said: ''It is in line with Elvis is alive and well and serving in a McDonald's somewhere in Manly. Qantas subsidising Jetstar is another one of these great conspiracy theories.''

 

But the Australian and International Pilots Association said the doubling of profits confirmed the value the Qantas brand and cast doubt on the justification for shifting resources to Asia.

 

Qantas's engineers will begin one-hour stoppages today while long-haul pilots were waiting to digest the latest earnings before deciding on their next industrial action.

 

 

Source: http://www.theage.com.au/business/qantas-flies-high-aims-higher-20110824-1ja8k.html

 

ASX Announcement: http://www.asx.com.au/asxpdf/20110824/pdf/420l5qt1tz8zyp.pdf

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