Qantas Profits While Cathay Pacific Losses Along With Lufthansa

• August 24, 2016
• By Pete Nisbet
• 0

Australian airline Qantas profits reach record levels while Cathay Pacific posted losses along with Lufthansa earlier this year. Qantas profits reached a record level of A$1.42 billion, or $1.1 billion US.  This is almost twice last year’s profit, and a dividend will be paid to shareholders for the first time since 2009.

Qantas Profits After Restructuring

This excellent result is due largely to the restructuring carried out after the record losses of A$2.8 billion ($2.6 billion) in 2014. Restructuring involved staff cuts, reduced capacity and it must be said that the oil prices slump also had a lot to do with it.  Nevertheless, it is a marvellous result for the company. Alan Joyce, Qantas Chief Executive, stated that the company had become more agile, created value for its shareholders and had provided a platform for future investment.

The result is even more admirable given that most other aviation companies had seen a downturn in business and profits.  The global economic slowdown has resulted in many businesses experiencing extreme difficulties.

Lufthansa Losses

Last month Lufthansa experience a sharp drop in long haul business to Europe.  As a result, it reduced its profit forecast from “slightly above previous year” to “slightly below previous year”.  This was largely put down to terrorist activity and the state of the world’s economy.

Earlier in August, Hong Kong airline Cathay Pacific suffered an 82% reduction in half-year profit. This was explained as being due to competition and also to the slowdown in China’s economy. First-half profit dropped 82% from last year to HK$353 million ($45.5 million) while revenue dropped 9.2%.

Cathay Pacific Issues While Qantas Profits

Cathay Pacific has many issues at the moment – competition, losses in fuel hedging, air fare prices and a slow economy causing corporate travel to be reduced, thus losing income from high premium class seats.

It must be said, however, that Qantas has not been immune to these same issues but has pulled itself up and made record profits.  All eyes are now on the airline to find out if this amazing transformation can be maintained over the next half year.