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Qantas reports 68% profit drop, unveils share issue
Posted: 04 February 2009 0925 hrs

SYDNEY: Australia's national airline Qantas Wednesday reported a 68.2 per cent fall in first half pre-tax profit amidst the global economic downturn and announced a plan to raise millions through a share issue.

The airline revealed profit before tax of A$288 million (US$187.2 million) for the half-year to December 31 and reaffirmed its full year forecast of around A$500 million.

Qantas also said it would raise A$500 million from an institutional placement and would allow other shareholders to subscribe for up to A$10,000 worth of ordinary shares through a share purchase plan.

The capital will give the airline "financial flexibility" and will be used to support it’s A$35 billion fleet renewal programme and reduce net debt.

Net profit fell 66 per cent to A$210 million, marginally beating forecasts of around A$203.7 million for the half year, according to an average forecast from a survey of four analysts by Dow Jones Newswires.

Qantas chairman Leigh Clifford said that while the group - which includes discount offshoot Jetstar - was affected by the global economic downturn and volatility in currency and oil prices, it remained strong and profitable.

"Our revenues have come under pressure, but through calibrating our network, stimulating demand through attractive pricing, maximising the performance of our diversified businesses, and restraining costs, we have achieved a very good result in challenging times," he said in a statement.

Chief executive Alan Joyce said Qantas was differentiated from many of the recently failed global airlines by its high degree of structural flexibility.

"With two flying brands and a diversified portfolio of businesses, the group has the scale and scope to respond rapidly to market developments and will be well-positioned to resume growth as soon as conditions improve," said Joyce.

"We are accelerating initiatives to reduce costs in the short-term, while continuing to seek permanent efficiency improvements."

The airline last year implemented two rounds of capacity cuts and sacked 1,500 workers as the global financial crisis hurt passenger demand.

Group revenue rose 1.7 per cent to A$7.92 billion but passenger revenue from its flying businesses fell 0.7 per cent to A$6.4 billion.

The airline declared an interim dividend of six cents a share, down from 18 cents.