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Qantas shares rally as Joyce vows to stay put

AFP

Qantas chief executive Alan Joyce poses in front of a model Airbus A380 in Sydney, February 2013Qantas chief executive Alan Joyce poses in front of a model Airbus A380 in Sydney, February 2013

Qantas chief executive Alan Joyce poses in front of a model Airbus A380 in Sydney, February 2013Qantas chief executive Alan Joyce poses in front of a model Airbus A380 in Sydney, February 2013

Qantas chief executive Alan Joyce brushed off calls to resign as shares in the carrier rallied further Friday after it forecast a return to profit in 2015 following a brutal round of cost cutting.

The Australian flag carrier posted a record annual net loss of Aus$2.84 billion (US$2.65 billion) on Thursday, driven by restructuring costs and a writedown of its ageing international fleet.

But it also voiced confidence of returning to an underlying profit in the first half of 2015, which saw several brokers upgrade their price targets for the stock.

"The net result has seen Qantas provide guidance of a return to profit in underlying net profit before tax in 1H15, clearly a nice turnaround on the 1H14 underlying loss of Aus$252 million," JP Morgan said in a note.

The share price jumped 6.95 percent on Thursday and gained another 6.14 percent on Friday, closing at Aus$1.47.

Despite some cheer for investors, union figures and independent senator Nick Xenophon called for the airline to fire Joyce and chairman Leigh Clifford.

"Alan Joyce is to Qantas what Caligula was to the Roman Empire," Xenophon told reporters, adding that since the Irishman took over five years ago he had earned Aus$22 million.

In the same period, the share price had plunged 40 percent, he said.

"He is really someone who has trashed the reputation of a great international airline."

The Transport Workers Union blamed a "lack of management" for the huge losses while the Australian Services Union said Joyce and Clifford were "the architects of this demise and they're the only ones that haven't lost their jobs".

Qantas is in the process of axing 5,000 jobs, with about half shed so far.

Despite the shocking numbers, Joyce won political support from the conservative government, which said the company was positioning itself for a stronger future.

The chief executive told ABC television he had no intention of leaving.

"I think the facts absolutely make it clear about why the airline is having a problem... fuel prices are up Aus$253 million," Joyce told the broadcaster on Thursday evening.

"We've seen our revenue take a hit by Aus$500 million as a consequence of 10 percent capacity growth by foreign airlines ... nearly every carrier operating into Australia is saying it's losing money.

"That's nothing to do with Leigh or me."

As well as soaring fuel costs and excess capacity, Qantas has had to deal with redundancy payouts and a Aus$2.6 billion non-cash writedown of the value of its international fleet.

This was largely due to the historical cost of aircraft purchased at a much lower currency exchange rate.

Qantas' international arm continued to underperform, booking a loss of Aus$497 million compared with Aus$246 million in the 2013 financial year.

Domestic operations turned a Aus$30 million profit -- but this was substantially lower than the previous corresponding period.

Date created : 2014-08-29