In a time of bad news and a gloomy industry outlook, new announcements have been relatively short to come by.…
Qantas Records Increased Revenue in 2019, Plans For Project Sunrise with Ultra-Long-Haul Research Flights
Qantas is looking back on another strong year financially while also looking to the future with a new experiment on the way in 2020. The airline posted record revenues over the last fiscal calendar year but failed to turn that into a record profit due to changes in fuel pricing and currency variations that cost the airline an additional $768 million.
In total, the airline recorded a 17 percent drop in Underlying Profit Before Tax to $1.30 billion and a 6 percent drop in Statutory Profit Before Tax to $1.27 billion.
Domestically, the airline saw a four percent drop in profit as the carrier’s Underlying Earnings Before Interest and Taxes (EBIT) was down to $1.03 billion but Unit Revenue increased four percent. Qantas internationally turned a $285 million EBIT but still saw a 28 percent decline as the airline adapted to the changing Australian currency and fuel pricing.
Despite the drop, the airline recorded a two percent increase in seat factor and expects more next year with the expanded joint effort with Oneworld alliance partner American Airlines.
The airline’s subsidiaries also saw strong results with the Australia Post expanding its contract with Qantas Freight for up to seven years and Qantas Loyalty posting an eight percent increase to $374 million in Underlying EBIT. Low-cost subsidiary Jetstar, however, saw mixed results.
While the Australian, Pacific and Japanese arms of Jetstar saw solid profitability, the parent company noted that Jetstar Asia and services to New Zealand were struggling due to airport conflicts and lack of revenue which the airline is simply observing for now.
Documenting another strong year for the carrier, Qantas CEO Alan Joyce noted, “Each key part of the Group delivered a strong profit in FY19. Domestically, Qantas and Jetstar continued to lead in the corporate, premium leisure and price-sensitive markets.
“Qantas International had a very strong second half after a tough start to the year. Fares had time to catch up to higher fuel prices and the total number of seats in the market shrank. Our investments in fleet and network are paying off, particularly with 787s, Perth-London and our Singapore hub. To put it simply, our strategy is working.”
Despite the drop in profit from 2018, the airline will still give back to both shareholders and employees. For the owners, the airline will pay out a 13 cent per share dividend as well as offering a buyback of up to 79.7 million active shares. As for the employees, Qantas will give back to its 25,000 non-executives with the addition of staff travel bonuses that reach $1,250 per person.
As for the future, Qantas is planning research flights to study the feasibility of ultra-long-haul flights between Sydney and New York and London. The flag carrier has teamed up with Monash University, experienced in experiments on ultra-long-haul flights analyzing sleeping, eating, and movement patterns on such flights.
For the mammoth experimental flights acting as a necessary prelude to Project Sunrise, Qantas will use its own employees flying on newly-delivered Boeing 787-9 Dreamliners on flights from London and New York to Sydney. Overall, Project Sunrise is Qantas’ goal of achieving nonstop flights from eastern Australia to North America’s Eastern Seaboard and Europe’s Western Seaboard.
The experiment will see the Dreamliners filled with just 40 people, each equipped with sensors to monitor the effect of the flight on their bodies. The airline will operate these flights to help determine whether or not the convenience of these nonstop flights is outweighed by the strain of such extended flight durations on passengers and crew alike.
Joyce elaborated that, “No airline has done this kind of dedicated research before and we’ll be using the results to help shape the cabin design, inflight service and crew roster patterns for Project Sunrise. We’ll also be looking at how we can use it to improve our existing long-haul flights.”
Later on, however, he stressed that “There’s plenty of enthusiasm for Sunrise, but it’s not a forgone conclusion. This is ultimately a business decision and the economics have to stack up.”
The airline also announced upgrades and new fleet expectations going into its 2020 financial year. On top of more Dreamliners being included into the fleet and the Boeing 747 fading away, Qantas will refurbish its existing Airbus A380s to feature new seats, a new cabin layout and a new onboard lounge with the first remodel aircraft due to appear in September. Furthermore, Jetstar will take hold of its first A321neo in mid-2020, adding another variant to the A320-family dominated airline.
The announcements come as Qantas prepares to enter its 100th year of operation later this year.
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