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Share buyback as Qantas half-year profit soars to US$497m
[SYDNEY] Australian carrier Qantas on Tuesday said first-half net profit soared 234 per cent on the back of belt-tightening and lower oil prices as it announced a A$500 million stock buyback to share the spoils with investors.
The A$688 million (US$497 million) result comes on the heels of a ruthless cost-cutting drive that has seen thousands of jobs axed and aircraft deliveries deferred in recent years to stem mounting losses.
Underlying profit before tax in the six months to December 31 - the airline's preferred measure of financial performance - was A$921 million, at the upper end of analyst expectations.
The result was boosted by savings through the airline hedging on lower fuel prices.
"This record result reflects a stronger, leaner, more agile Qantas," said chief executive Alan Joyce.
"Without a focus on revenue, costs and balance sheet strength, today's result would not have been possible.
"Both globally and domestically, the aviation industry is intensely competitive.
"That's why it's so important that we maintain our cost discipline, invest to grow revenue, and continue innovating with new ventures and technology." The bottom line was boosted by strong performances across all of the airline's divisions, with both domestic and international operations in profit.
Domestic earnings improved to A$387 million, up A$160 million from the previous corresponding period, while the once-struggling international arm was A$270 million in the black.
The turnaround further vindicates Mr Joyce's strategy of slashing A$2.0 billion in costs by the end of 2016/17, with savings of A$1.35 billion realised so far.
To reward shareholders, the company announced an on-market share buyback, which should push up the value of the shares remaining on the market.
"The strength of our performance and balance sheet means we can continue to reward our shareholders for their confidence in our business," Mr Joyce said.
"We're pleased to be able to build on last year's US$505 million capital return with the buyback we announce today."