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Qantas extends investor splurge after record annual profit
[SYDNEY] Qantas Airways Ltd, this year's best-performing airline stock, kicked off another round of investor payouts as it reported record annual profit on the back of a recovering Australian resources industry and increased demand for leisure travel.
The Australian airline will return as much as A$500 million (S$502.69 million) to shareholders, including a higher-than-expected dividend and another stock buyback, it said in a statement on Thursday. About 27,000 employees were showered with bonuses worth A$67 million.
"We're seeing healthy demand across key sectors matched with improving levels of capacity discipline, which is a positive sign for the year ahead," chief executive officer Alan Joyce said in the statement. The company said it's confident it can "substantially recover" higher fuel costs this financial year.
The splurge on shareholders tops a 33 per cent jump by Qantas stock this year. Mr Joyce is upgrading his fleet with more fuel-efficient aircraft and redirecting international capacity toward Asia to tap a travel and tourist boom. The carrier has ordered six additional Boeing Co 787-9 aircraft, the first of which will be delivered before the end of next year, taking its Dreamliner fleet to 14 by 2020.
Underlying pretax profit in the 12 months ended June rose 14 per cent to a record A$1.6 billion, the top of Qantas's own forecast.
While Mr Joyce's cost-cutting turnaround plan has revitalised Qantas, it's not clear whether the airline can handle a full cyclical downturn. Fuel and manpower are typically a carrier's largest expenses, and Brent crude has more than doubled to about US$75 a barrel from a January 2016 low.
The airline said Thursday its total fuel bill is expected to increase by about A$690 million to A$3.92 billion in the year ending June 2019.
The full-year results incorporate the March debut of Qantas services between Perth and London, the first direct connection between Europe and Australia. The same month, Qantas started funneling other flights to Europe through Singapore instead of Dubai.
At home, where Qantas dominates smaller rival Virgin Australia Holdings Ltd, the airline is cashing in on travel demand from a recovering resources sector. There's been a spike in exploration for commodities including lithium in Western Australia, driving demand for more flights.