Qantas share price tumbles on profit warning; IATA October traffic figures

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By TESTCustomwebLP TESTCustomwebLP December 5, 2013 12:43

Qantas share price tumbles on profit warning; IATA October traffic figures

Qantas has disclosed in a statement that it expects to post a loss of up to A$300 million ($271 million for the three months to December 2013. Unexpectedly shares in Qantas dropped by 15% on the news, which was accompanied with an announcement for 1,000 job cuts.

Qantas blamed a “marked deterioration” due to tougher competition and slowing demand. Chief executive Alan Joyce also blamed record fuel costs and a strong Australian dollar for the stress on profits. He acknowledged that the situation warranted urgent action and stated that the airline was dedicated to acting to secure its future.

Qantas also expects the six months to June 2014 to be volatile. Meanwhile, the International Air Transport Association (IATA) has recently announced its global passenger traffic results for October. These show a moderate acceleration of the robust demand trend of the last few months with total revenue passenger kilometers (RPKs) up 6.6% compared to October 2012, an improvement over the September increase of 5.2%. A capacity increase of 6.5% meant that load factor was virtually flat at 78.9%.

“October traffic results reinforce expectations for a strong fourth quarter traffic performance in line with rising business confidence and better economic performance in the major advanced economies,” said Tony Tyler, IATA’s Director General and CEO.

For the international passenger market, demand was up 6.9% compared to the year-ago period with airlines in all regions recording growth. Capacity rose 6.6% and load factor climbed 0.2 percentage points to 78.4%. Asia-Pacific carriers saw a 7.8% rise in demand during October and was the strongest performance among the three biggest regions. With capacity up 7.1% versus October 2012, load factor rose 0.5 percentage points to 76.4%.

Traffic for European carriers’ also grew but by a more modest 5.4% in October, on the back of a 4.6% rise in capacity. Load factors rose by 0.6 percentage points to 81.0%.

North American airlines saw demand rise 3.6%, with capacity up by 4.6%, resulting in a 0.8 percentage point decline in load factor to 81.4%. There are expectations that international demand could remain close to year-to-date rates (2.8%) for the rest of 2013.

In the Middle East, carrier’s year-over-year traffic growth in October was 14% along with a similar rise in capacity. Load factor remained flat compared to the year-ago period at 75.5%.

Latin American airlines demand rose by 8.3% thanks to solid trade growth and business related travel, said IATA. Capacity rose 4.6% and load factor jumped 2.7 percentage points to 79.7%.

African airlines’ traffic climbed 3.5% compared to October 2012, the slowest rate of growth for any region and well below year-to-date expansion of 6.4%. Capacity rose 8.7%, resulting in a 3.3 percentage point drop in load factor to 66.1%, the lowest load factor for any region. Overall, domestic travel demand rose 6.0% in October compared to a year-ago, largely driven by strong traffic growth in developing markets. Total domestic capacity was up 6.3%, however, pushing load down 0.2 percentage points to 79.8%.

“In 2013, the airline industry will carry more than 3 billion passengers in a year for the first time. And on 1 January 2014, we will celebrate a century of scheduled commercial aviation. These twin landmarks provide an opportunity to reflect on the enormous contribution aviation makes to all of our lives. That contribution comes not from the fees and taxes with which governments continue to burden aviation and air travelers, but rather from the ability to bring people together, connect people to markets and to create opportunities for greater understanding among cultures,” said Tyler.

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By TESTCustomwebLP TESTCustomwebLP December 5, 2013 12:43
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