Qantas forecasts improved H1 profit on slower revenue growth

[BENGALURU] Australia's Qantas Airways Ltd forecast higher underlying first-half profit on Thursday as it cut capacity and raised fares, although expectations of slower revenue growth pushed its shares down as much as 7 per cent.

Qantas said it expects to report underlying profit before tax in the range of A$900 million (S$943 million) to A$950 million for the six months to Dec 31, compared with A$852 million recorded a year earlier.

Revenue for the first quarter ended Sept 30 rose 5.1 per cent to A$4.19 billion.

"The domestic market is healthy but remains very competitive," chief executive Alan Joyce said in a statement."The high rate of revenue growth we've seen so far this year is likely to slow when compared with what was a strong second half last year."

Qantas shares dropped at the open after the trading update before recovering some ground to be 4 per cent lower at A$6.14. The carrier's shares have surged more than 90 per cent so far this year.

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Domestic revenue per available seat kilometre (RASK), a measure that combines ticket prices and seats filled, jumped 8 per cent in the quarter. International revenue rose just 0.2 per cent in the quarter ended Sept 30, compared with a 6.9 per cent decrease in the year-ago quarter.

The airline reported a near-record annual profit in August while also announcing a new cost-cutting target of A$400 million in savings each year.

REUTERS