Australia's national airline Qantas has posted full-year losses of $2.6 billion - its biggest ever annual loss. The development is likely to hasten efforts to allow foreign investment in the troubled carrier.
One of the world’s most recognizable airlines has a proud history going back almost 100 years. But Qantas is in deep trouble. Soaring fuel costs and fierce competition have resulted in mass redundancies and huge financial losses.
Results for this financial year - losses of $2.6 billion - are the worst in Qantas’ history. The airline says the dismal figures are, in part, due to weak demand, the huge write-down on its international fleet and costs associated with thousands of job cuts.
Qantas chief executive Alan Joyce believes that the carrier is through the worst, and will soon bounce back. “We believe that we've turned the corner and that we've given an outlook statement saying that this business will, we believe, subject to factors outside our control, get back into profits for the first half of this financial year. We've made major progress with our Qantas transformation program, which is delivering real benefits in turning the business around,” he said.
Qantas has an alliance with Dubai-based Emirates, and wants the Australian government to relax regulations that limit foreign ownership of the airline to 49 percent as travelers continue to desert Australia’s national carrier.
Passenger numbers are falling as the aviation market in Australia has become saturated. Qantas is facing relentless competition on both its international and domestic routes.
The airline's chief executive says allowing greater foreign ownership could lead to more lucrative international partnerships.
Paul Patterson, a professor of marketing at the University of New South Wales, believes that Qantas has failed to make the most of a famous brand.
“There are four things in branding theory that you have got to have to have a really successful brand. You’ve got to be different. I’m not sure that Qantas is that different today. It has got to be relevant. It has got to resonate with your consumers. I think Qantas probably does with a segment of the market, but with the other segment of the market that wants price, cheaper airfares, Qantas doesn’t resonate with them. They have got to be known for some sort of quality or value, at least, and people have to understand them. And I’m not quite sure that people understand what Qantas stands for today,” said Patterson.
Analysts say the financial results are so bad that the entire board of management should resign. Investors, however, seem far less worried.
Following the chief executive's optimistic view of the firm's future, the carrier's shares rise in Australia by up to eight percent in early trade.