Shareholders in 'The Flying Kangaroo', Qantas Airways Limited (ASX: QAN), will be breathing a sigh of relief following an excellent turnaround in the airliner's fortunes.
In the year ended 30 June 2015, Qantas' revenue increased just 3%, but it achieved an underlying profit before tax of $975 million – a $1.6 billion turnaround from 2014's result.
All operational divisions posted improved results, but Qantas International and Qantas Domestic were standout performers with underlying divisional profit jumping significantly higher year over year.
CEO Alan Joyce said the result was due to the headway made on the $2 billion 'Qantas Transformation' program which has so far realised benefits of $1.1 billion.
"We are halfway through the biggest and fastest transformation in our history," Mr Joyce said. "Without that transformation, we would not be reporting this strong profit, recommencing shareholder returns, or announcing our ultra-efficient Dreamliner fleet for Qantas International."
However, a positive impact from lower fuel prices, depreciation savings, higher revenue per seat kilometre and the repeal of the carbon tax also played a big part in the company's success.
With $2 billion in operating cash flow, net debt dropped by over $1 billion. This places the company within its desired capital structure range, enables it to become 'investment-grade', and – importantly – enables increased returns to shareholders.
Mr Joyce is particularly proud of the airliner's ability to reward shareholders. "The financial discipline we have applied means we can reward our shareholders, who have been both patient and supportive throughout our transformation," he said.
Subject to shareholder approval at the AGM in October, Qantas plans to return $505 million to shareholders as a capital return in early November 2015. That's equivalent to 23 cents per share, or a yield of 6.1% based on yesterday's closing price. "We're delighted to make this announcement today," Mr Joyce added.
Outlook
In addition to being able to return funds to shareholders, Qantas can also invest in the future. In a separate announcement to the ASX it said it had ordered eight "ultra-efficient" Boeing 787-9 aircraft for delivery in 2017. Further, group capacity is expected to increase 3% to 4% in the first half of the current financial year, with another $450 million in transformational benefits anticipated.
