Qantas predicts massive profits drop

Shares of Qantas Airways plummeted to an all-time low today after the Australian flagship carrier forecast a drop of up to 91% in full-year earnings.

Qantas said European economic woes and a soaring fuel bill would probably result in losses at its international business, more than doubling in the year ending on June 30. It also faces tough competition in its home market.

Qantas expects underlying pre-tax profit in the 2011-12 fiscal year in a range of AUS$50m to AUS$100m – a plunge from the previous year’s AUS$552m.

“The forecast result reflects the recent deterioration in global aviation operating conditions driven by the European economic crisis, the group’s highest ever jet fuel bill, and substantial capacity increases in the domestic market that have reduced yields,” Qantas said in a statement.

The news pummelled the airline’s stock price, which has shed 40% in the past 11 months. Shares plunged 17.6% by midday local time.

Qantas’s international business is expected to post a loss of more than AUS$450m in the year to June 30, more than double the loss of 216 million it posted a year earlier.

The airline’s domestic operations are forecast to deliver earnings of more than AUS$600m, up from AUS$552m in the previous financial year.

Qantas’s net profit for the year to June 30 will be hurt by restructuring, which is forecast to cost AUS$370m-AUS$380m.