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Qantas Airways half year profit takes a hit from higher fuel costs
[BENGALURU] Australia's Qantas Airways reported a 19 per cent drop in half-year profit on Thursday, as increased domestic and international revenue failed to fully offset higher fuel prices.
Underlying profit before tax, its most closely watched measure, fell to A$780 million (S$755.6 million) for the six months ended Dec 31, from a record A$976 million a year ago.
The airline's international business was hit by a "rapid rise" in fuel costs, which were up A$219 million during the half.
Commenting on the airline's efforts to combat rising fuel costs, chief executive Alan Joyce said "that's easier to achieve in the domestic market than on longer international routes, where fuel is a much bigger factor, and that's reflected in the segment results we're reporting today."
The company expects its fuel bill for the full year to be about A$3.90 billion, 21 per cent higher than a year ago.
Qantas said the recent decline in oil prices puts the airline in a position to fully recover from higher fuel costs by the end of the fiscal year.
Qantas, known for its red kangaroo logo, had not provided a first-half earnings forecast. It said on Thursday it would return A$500 million to shareholders through dividends and share buybacks.
Quantas said it would pay an interim dividend of 12 cents per share and undertake an on-market purchase of up to A$305 million.
The airline, which controls nearly two-thirds of the country's domestic capacity, posted a 6 per cent rise in revenue to A$9.21 billion during the half, as well as a 6 per cent rise in its domestic market.
The Australian domestic aviation market is largely a duopoly between Qantas and smaller rival Virgin Australia Holdings, both of which have increased fares and boosted domestic earnings by cutting capacity.
Last week, Virgin posted its best half-year underlying profit before tax in a decade and forecast a 7 per cent rise in revenue in the current quarter on the strength of its domestic business and forward bookings.