Qantas Airways Ltd’s share price up, posts a return-to-profit projection due to expenses reduction

The largest airline carrier in Australia, Qantas Airways Ltd, said that its turnaround strategy is starting to bear fruit, considering the fact that the Australia-based company has just projected its best first half-year results in four years. The forecast is believed to be also a result from a cost-cutting programme estimated to AU$2 billion, while declining oil prices contributed as well.

The Chief Executive Officer of the company, Alan Joyce, said on a media call, cited by Bloomberg: “I’m here to complete the job that I started. With the company turning the way it is, I’m very confident that my tenure – as long as the board and shareholders are comfortable with what I’m doing – will continue.” As reported by the Wall Street Journal, Mr. Joyce also added: “Today we confirm that Qantas is set to report its best first-half result since 2010.”

The CEO Joyce also said that Qatas is to make a top priority paying its debt instead of purchasing new aircraft. The Australian company intends to stick to following its three-year reorganization plan.

On a pre-tax underlying basis, the airline carrier projects a profit, estimated within the range from AU$300 million ($249 million) to AU$350 million ($289 million) during the first half ending December. This figure came above market expectations. Qantas reported a AU$252-million loss over the same period a year earlier. It had previously projected a return to profit, but did not provide any specific numbers.

Qantas also did not provide a projection on a bottom-line net-profit basis. It, however, said that it expects all of its operating segments to swing back to profit on an underlying pre-tax basis in the first six months of the fiscal year.

Qantas Airways Ltd. was up 13.81% to close at AU$2.39 per share today on the Australian Stock Exchange, marking a one-year gain of 132.04%. The company is valued at AU$4.61 billion. According to the Financial Times, the 11 analysts offering 12-month price targets for Qantas Airways Ltd have a median target of AU$2.25, with a high estimate of AU$2.95 and a low estimate of AU$1.25. The median estimate represents a +7.14% increase from the last price of AU$2.10.