Qantas Starts To See Profits

18th Nov 2014

The domestic market has been the battleground for the country's major carriers, sending many of them resorting to whatever strategies they could think of just to outsmart each other. But not all strategies work in their favor as evidenced by huge losses that most of them accumulate in the process.

Qantas, for years, has been battling with Virgin for dominance in the domestic market sector, with both airlines serving virtually the same routes often with same frequency and almost the same time slots.

If Qantas is to be believed, the capacity war is over that it finally found its way to positive results in terms of financial gains over the first quarter of this year.

According to the airline's CEO, Alan Joyce, Qantas was able to net a pre-tax profit during the first quarter of 2014 without giving exact figures. The first-quarter gain was an improvement over last year's huge losses which was estimated to be at $2.8 billion.

Virgin, however, made a contrasting performance during the same period, posting $45 million losses. The figure was exclusive of the losses made by Tigerair Australia, its subsidiary.

Qantas was expecting the domestic market capacity to be flat during the first half of this year which is down from the original projection of 1% growth for August.

The airline's international operations also showed positive signs during the first quarter of this year. Qantas also operates Jetstar and QantasLink, its low-cost and regional airline brands, respectively.

The airline's chairman, Leigh Clifford, said that they are planning to cut down $2 billion on operating costs for the next three years. This includes, of course, the axing of close to 5,000 jobs which already started early this year.

A Deutsche Bank analyst said that the airline might be able to achieve growth by 1% during the first half of this year while its major rival, Virgin, is going to grow by 5%.

Qantas was earlier castigated by Senator Nick Xenophon for the airline's investment in low-cost subsidiary, Jetstar Hong Kong, which remains, to this day, unable to take off.

CEO Alan Joyce, however, disclosed that it is no longer pursuing additional investment in Jetstar Hong Kong after the initial $30 million it had invested already. He hopes to launch its operations next year.