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Qantas Airways posts $2.6 billion loss for year

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August 27, 2014 11:04 PM EST | AP

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SYDNEY (AP) — Qantas Airways Ltd. on Thursday posted a record 2.8 billion Australian dollar ($2.6 billion) loss, reflecting a profit-draining battle with its smaller rival Virgin Australia and aircraft write downs.

The loss for the financial year ended June 30 is the largest the former state-owned airline has posted in its 94-year history. It made an AU$1 million profit in the previous year.

The dire result was expected. Shares of Qantas were up 7 percent in Sydney on the airline's confirmation it would separate its domestic and troubled international businesses. It will establish a company for the international business that will be able to attract new investors after an Australian law change eased limits on foreign investment in Qantas

The result included an AU$2.6 billion write down of the value of its aging international fleet of Boeing 747s and Airbus A380s, reflecting a weakened Australian dollar.

Excluding the write down and other one-off costs, Qantas made an underlying pre-tax loss of AU$646 million, compared to a AU$186 million underlying profit a year earlier.

Qantas chief executive Alan Joyce described the result as "confronting," but said the massive loss represented history.

"We have now come through the worst," he said in a statement.

"With our accelerated Qantas transformation program, we are already emerging as a leaner, more focused and more sustainable Qantas group," he said.

Joyce said the underlying loss for the latest year reflected higher fuel costs and growth in its passenger capacity outstripping demand.

Joyce forecast a profit in the first half of the current fiscal year.

The airline announced in February it would cut its employees by 5,000. So far it has shed 2,500 workers.