By Jamie Freed
SYDNEY (Reuters) -Qantas Airways Ltd said on Thursday it would buy back up to A$400 million ($276.32 million) of shares despite posting a slightly wider annual underlying loss after its financial performance turned around in the second half as demand returned.
The airline posted an annual underlying loss before tax of A$1.86 billion in the 12 months ended June 30, wider than the A$1.77 billion restated figure from a year earlier and slightly bigger than analyst forecasts.
The bulk of the losses were reported in the first half when domestic and international borders were closed.
“Our debt is now below our target range – so in addition to the investments we’re making in customers and our people, we’re in a position to start repaying shareholders,” Qantas Chief Executive Alan Joyce said of the surprise on-market buyback in a statement.
Investors had provided A$1.4 billion in equity during the pandemic to help shore up the airline’s balance sheet.
While demand has improved, Qantas in recent months has been trimming its domestic capacity from earlier forecasts due to widespread staff shortages at airports, high rates of crew illness in winter and elevated fuel prices.
On Sunday, Qantas said it would offer A$50 vouchers, loyalty status extensions and lounge passes to frequent flyers, a move to apologise for a rise in delays, cancellations, lost baggage and staffing issues since travel demand rebounded.
On Thursday, Qantas said domestic capacity would decline a further 10 percentage points from its last update in June in response to the higher fuel costs and operational challenges and forecast its on-time performance would improve as a result.
The airline also faces industrial action from engineers, beginning with one-minute work stoppages, as they push back at a time of high inflation against the carrier’s standard offer to unions of a two-year wage freeze followed by 2% annual increases.
Qantas said it expected to spend A$50 million on pay increases for employees covered by union agreements this financial year. It had already set aside A$200 million for a A$5,000 recovery bonus and 1,000 share rights for more than 17,000 staff.
($1 = 1.4476 Australian dollars)
(Reporting by Jamie FreedEditing by Chris Reese and David Gregorio)
