Qantas profit sends shares soaring

Qantas Airways shares rose the most in more than seven months in Sydney trading after Australia's biggest carrier said it expects first-half profit before tax to be as much as A$150 million.

The shares yesterday climbed as much as 6.6 per cent, the biggest intraday gain since April 2, to A$2.92, before closing up 5.1 per cent at A$2.88.

It was the second-largest increase among 200 stocks in Australia's benchmark index.

"It seems to suggest upgrades to full-year estimates," said Matt Crowe, an analyst with JPMorgan Chase in Sydney. "It looks like the domestic market in particular is recovering quite well. International is still pretty weak but improving."

Qantas posted its first half-year loss in six years in August as the worst global recession since World War II caused customers to reduce travel and trade down to cheaper seats.

Passenger volumes and yields, a measure of revenue per customer, have improved as economies recover, with passenger numbers in November rising 9.7 per cent from a year earlier, Qantas said yesterday. First half profit was expected to be between A$50 million ($62 million) and A$150 million.

"The November statistics were probably the best we've seen for six months," JPMorgan's Crowe said.

Qantas posted net income of A$210 million in the six months ended December 31 last year. The profit estimates released yesterday are subject to volatility from an accounting standard concerning financial instruments such as fuel hedges, the airline said.

Airline losses in 2010 will be US$5.6 billion, 47 per cent more than forecast, as oil prices rise while carriers compete for passengers with lower fares, the International Air Transport Association said on December 15.

Qantas has announced it will increase services on its domestic routes as a result of improved demand.

Chief executive Alan Joyce said over 12 months from March 29, 2010, the airline would add more than 340,000 seats to routes.

"We are seeing some improvements in domestic demand," Joyce said. "The changes will see the addition of a total 19 return services across selected routes, while capacity will be restored on others by upgrading from Boeing 737 to larger Boeing 767 aircraft."

New return services will be introduced on the Adelaide-Melbourne, Brisbane-Sydney, Brisbane-Townsville, Melbourne-Perth and Sydney-Ayers Rock routes.

The Brisbane-Cairns and Brisbane-Melbourne services will be upgraded to provide 912 additional seats each week.

Joyce said Qantas would also increase existing daily Cityflyer services between Adelaide and Brisbane from December 29.

Four B737 services each week will be added to the present 20, increasing capacity by nearly 70,000 seats per year.

CLEARER SKIES

* Qantas yesterday said first half profit was expected to be between A$50 million and A$150 million.
* Passenger volumes and yield were improving.
* The airline will increase services on its domestic routes as a result of improved demand.
* Shares rose 5.1 per cent

- BLOOMBERG, AAP