Tuesday, June 5, 2012
Qantas Airways shares hit record low on international operation losses
The flagship Australian air line has been experiencing heavy losses on international routes while still doing well domestically. The CEO Al Joyce said:"We have taken decisive action to mitigate losses in Qantas international by withdrawing from loss-making routes"
Quantas shares dropped 18 per cent at one time Tuesday to A $ 1.16 a record low.. Over the last 11 months the stock has lost forty per cent of its value.The high price of fuel over most of the period was part of the problem. However there has been fewer customers with the global slowdown especially in Europe..
The international business is predicted to lose more than A(Australian) $ 450 million during the last year. The loss this year will be the first since the carrier was privatized in 1995. In spite of the large international loss there was a substantial profit on domestic flights.
Qantas also suffered from labor battles that grounded their entire fleet for two days last October. However the CEO was optimistic:"We remain focused on returning Qantas international to profitability in 2014 and for Qantas international and domestic combined to exceed their cost of capital on a sustainable basis within five years of August 2011," For more see this article.