Qantas’ business not yet back on track

 Qantas’ current business transformation strategy will have “cost impacts within the second half of FY13,” according to the airline’s chief executive Alan Joyce.

The transference of hub operations from Singapore to Dubai comes at an expense of AU$50 million.

“We’ve always made it clear that long term gain can’t be achieved without the short term cost of transition,” Mr Joyce said.

In August 2011 Qantas Airways identified that its international business was a single source of problems and set about creating a five year strategy in an attempt to turn things around.

The long term goal was to return business back to profitability by 2014.

However, international operations continued to struggle, through to the second half of 2012.

“Last year we made an operating loss during that period,” Mr Joyce said.

“We are [now] seeing aggressive short term responses from our competitors.”

Qantas also has a one-off operating cost of AU$25 million associated with resolving enterprise agreement back pay issues with their long haul pilots.

On the domestic front, Qantas “does not expect any improvement” during the second half of 2013.

“We still face a tough environment with a high degree of capacity growth in the market, pushing down yields and profitability,” Mr Joyce said.

Despite being unable to provide any profit guidance, Qantas Airways remains confident that they can deliver sustainable returns to shareholders.

“We are well aware that, in aviation, you can expect the unexpected, and we continue to have the flexibility to adapt to any changing circumstances,” Mr Joyce said.

Sourced: etravelblackboardasia