Bloomberg the Company & Products

Bloomberg Anywhere Login

Bloomberg

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.

Company

Financial Products

Enterprise Products

Media

Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000

Communications

Industry Products

Media Services

Follow Us

Qantas Slumps as Yields Drop to Decade Low Amid Virgin Fight

Don't Miss Out —
Follow us on:

Oct. 18 (Bloomberg) -- Qantas Airways Ltd., Australia’s largest carrier, said it expects the lowest yields in more than a decade for passenger flights as a capacity war with Virgin Australia Holdings Ltd. holds down fares. The shares fell.

Group yield in the six months ending December will fall 2 percent to 3 percent from a year earlier, Chief Executive Officer Alan Joyce said in a statement to the airline’s annual shareholder meeting in Brisbane today. The decline would leave yields at the lowest level in records dating back to 2003, according to data compiled by Bloomberg.

Qantas has added services after Virgin vowed to take market share in the profitable business-travel segment. Virgin has taken out credit lines from major shareholders and issued $797 million of bonds secured against its aircraft as it adds flights and upgrades lounges and business-class seats to crack Qantas’s 65 percent share of Australia’s local market.

“The domestic market is still absorbing capacity growth that has been double the long-run average,” Joyce said, according to a transcript of his statements. “This growth has come at the same time as weak underlying demand across the market.”

Qantas, up as much as five cents at A$1.53 before the shareholder meeting, closed down 3.4 percent at A$1.43, its biggest drop in 11 days. The stock has fallen 4 percent this year, compared with a 14 percent gain in the S&P/ASX 200 index.

Yield, a measure of earnings for each kilometer flown by a passenger, was 10.46 Australian cents in the six months ended December 2012, implying a range of 10.15 cents to 10.25 cents in the current period, based on Joyce’s estimate. The previous low was 10.28 cents in the same period of 2010, the data show.

Qantas’s group fuel costs in the second half will be a record for any half-year, Joyce said.

To contact the reporter on this story: David Fickling in Sydney at dfickling@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.