Qantas confirms its name as high flyer

AUSTRALIA’S Qantas Airways, buoyed

Meanwhile. Germany’s Lufthansa posted operating profits yesterday that beat analysts’ forecasts and lifted its share price, thanks to cost and capacity cuts made in response to the September 11-induced industry slump.

Another major airline suffering from the industry slump, Continental Airlines is implementing a series of revenue-generating and cost-saving initiatives that are designed to achieve pre-tax contributions in excess of $350m on an annual basis when fully implemented and $80m for the balance of 2002.

The initiatives were a necessary response to the dramatic changes in the marketplace, including continued deterioration of revenue and rising fuel, insurance and security costs, the airline said.

Australia’s biggest airline Qantas yesterday also unveiled plans to raise A$800m to fund expansion and said a recovery from heavy domestic discounting and the September 11 attacks had continued in July.

The healthy profit, in line with market forecasts, showed Qantas has capitalised on the failure last year of its biggest rival Ansett, sidestepping the turmoil which engulfed global aviation after September 11.

“What we’ve seen in July is a continuation of the growth and we expect the growth to continue,” chief executive Geoff Dixon said.

Full year profit rose 3% on a year ago, struck on 11% revenue growth to A$11.32bn. “It was anticipated, but at the same time in today’s world it’s a very, very significant profit, particularly against almost A$250 million in additional fuel costs,” said Peter Harbison, managing director of the Centre for Asia Pacific Aviation.

“Some of the best airlines in the world are losing money, some of them in a very big way,” he added.

The German airline reported a first-half operating profit of 332m on sales of 8.2 billion. The figure implied a second-quarter operating profit of 320m more than three times as much as it made in the same period a year ago when a pilots’ strike hit earnings, on sales of 4.35bn.

“The management has done its homework”, said Union Investment fund manager Thomas Meier, adding that the cost cutting was impressive and even tourism unit Thomas Cook had performed better than expected.

“I’m positive on the stock,” he said.

Meanwhile, Continental Airlines will remove an additional 11 MD-80 aircraft from the schedule by the end of 2003, having already grounded 49 aircraft since September 2001.

Continental is implementing domestic capacity reductions that are among the largest in the industry. Domestic mainline jet capacity in August 2003, the peak month for domestic flying, will be approximately 17% below domestic capacity in August 2001. For all of 2003, domestic mainline jet capacity will be reduced approximately 4% year over year. This decrease is in addition to the 6.5% already reduced in 2002 compared with 2001.

The company will continue to monitor employment levels and hopes to avoid additional layoffs through a hiring freeze, retirements and voluntary leaves.