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Qantas clarifies profit warning
SYDNEY, Australia (CNN) -- Australian flag-carrier Qantas Airways has clarified its profit warning and now says pre-tax profit this year could be up to 30 percent below the market's earlier average estimate of Aust. $707 million ($451 million). That indicates pre-tax profit for the year to June 30 could fall as low as A$495 million ($316 million), with Merrill Lynch cutting its net profit estimate by 27 percent to A$339 million. Given that Qantas posted a first-half net profit of A$352.5 million in February, the Merill Lynch forecast sees the carrier making a second-half loss. On Wednesday, Qantas -- which is held 17 percent by British Airways -- downgraded its profit outlook for the second time in six weeks because of the impact of the SARS virus on passenger numbers. (Full story) But it did not give any specific numbers in that downgrade. On Thursday morning, Qantas said that because of the volatility of aviation markets, it was "extremely difficult" to forecast booking trends or determine a full-year profit estimate with any accuracy. But it said that at the request of the Australian Stock Exchange, it was giving its "best current estimate" for pre-tax profit to fall between 20 and 30 percent from the A$707 million average figure prevailing in the market before Wednesday. After the profit warning, Qantas shares plunged 5 percent on Wednesday to finish at A$3.04, within sight of its one-year low of A$2.84 posted on April 28. But in early trade Thursday, Qantas is recovering some of that ground. It is up 1.97 percent to A$3.10 near midday. Qantas has been regarded as one of the world's most profitable carriers and is among the biggest by market capitalization. But like many other carriers, in recent weeks it has announced sharp cuts in services because of the fall in passenger numbers due initially to the war in Iraq and then the outbreak of SARS. On April 9, Qantas said it would cut 1,400 jobs by June 30 and convert another 300 jobs from full-time to part-time. It now expects to shed more jobs and defer capital spending in response to the passenger downturn. On Wednesday it said all its international routes had been affected by the SARS illness, with bookings to Hong Kong down 64 percent to to Japan down 30 percent. Traffic from Europe was also down sharply.
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