Qantas squeezes more revenue on transtasman route in busier market

Qantas Airways, Australia biggest airline, lifted revenue on transtasman routes by 18 percent last year amid increased traffic flows.

The airline's subsidiary Jetconnect, which manages the group's transtasman passenger schedule, lifted operating revenue to $75.3 million in the 12 months ended June 30 from $64 million a year earlier, according to financial statements lodged with the Companies Office.

That's the most revenue Qantas has generated from the transtasman route since 2009 and over the same period outpaced rival Virgin Australia's sales, which edged up $1.9 million to $274 million.

Market leader Air New Zealand reported a 4 percent drop in revenue from Australia and the Pacific Islands to $682 million, while at the same time increasing passenger numbers 3 percent to 3.28 million across those routes.

New Zealand government figures show the number of transtasman flights increased 1.5 percent to 41,656 in the year ended June 30, while New Zealanders departing for Australia climbed 10 percent to 1.07 million and arrivals from Australia advanced 4.2 percent to 1.23 million passengers.

Still, Qantas' Jetconnect unit reported a 14 percent drop in annual profit to $7.6 million, with a 20 percent lift in manpower and staff related costs to $44.7 million and a 26 percent increase in aircraft operating variable expense to $19.2 million.

The Australian airline's discount Jetstar brand lost ground in New Zealand, with 20.7 percent of the domestic market as at June 30, down from 22.4 percent a year earlier, when it published the group's annual result in August.

Passenger numbers dropped 7.7 percent to 1.72 million and revenue passenger kilometres fell 6.2 percent to 1.13 million. Capacity shrank 4.5 percent to 1.42 million available seat kilometres, though the unit said at the time it had a strong and improving second-half performance across key metrics leading into the 2015 financial year, and had "strong yield improvement on key routes."

Jetstar Airways, which employs and hires cabin and technical crew for the budget airline, reported a profit of $2.5 million in the 12 months ended June 30 from $2.4 million a year earlier, according to separate financial statements.

Operating income, which is derived from the wider Jetstar unit, increased 4.1 percent to $27.9 million, lagging the 5.6 percent increase in manpower and staff related costs of $24.7 million.

In August, Qantas embarked on a transformation programme with plans for more redundancies and an overhaul of its structure as it seeks to return to profitability.

It posted an annual loss of $A2.84 billion in the June year as it wrote down the value of its international fleet by $A2.56 billion, faced fleet restructuring costs of $A394 million and redundancy and restructuring costs of $A428 million.

Since then, Qantas has said it anticipates all operating segments to be profitable in the first half, forecasting underlying pre-tax profit of $A300-350 million in the six months ending December 31. This would be its best result since 2010.

Shares of Qantas rose 2.1 percent to $A2.39 on the ASX and have climbed 114 percent this year.

(BusinessDesk)