Profit loss announcement drops Qantas shares to all time low
Australian flag carrier Qantas has warned its annual profit will drop by up to 91 per cent, sending its shares to an all-time low amid investor fears.
Qantas chief executive Alan Joyce warned that this financial year's pre-tax profit will fall to between $50 million and $100 million from $552 million last year.
Joyce said it would be a bottom-line loss for the year, but he declined to offer a forecast.
Joyce's announcement that flummoxed investors led to shares to a record low close, down 26.5c to $1.155, wiping $600 million off the value of the company, which has almost halved in value in a year.
According to The Australian newspaper, the company is now valued at $2.6 billion. That compares with Airlines Partners Australia's $11 billion private equity takeover offer that shareholders rejected for the airline in 2006.
The firm blamed the downgrade on a worsening global aviation environment, driven by high fuel prices that pushed up the airline's annual bill by $700 million to a record $4.4 billion, and a fall in yields due to increased international competition and domestic capacity increases.
It revealed that earnings before interest and tax (EBIT) at its international unit would blow out from $216 million last year to $450 million this year.
Chief financial officer of the airline Gareth Evans said cash flow was holding up. "We still retain a significant amount of cash on the balance sheet: over $3 billion. We still retain significant flexibility in our capital pipeline, which we've demonstrated a number of times over the last six, 12, 18 months, and we still hold an investment-grade credit rating which gives us access to a wide variety of different sources of funding. So we're very comfortable in that position."
Source: Europe News.Net
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