Nosedive predicted for Qantas profits
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A weak pricing environment and higher oil prices have prompted RBS to slash its 2009-10 pre-tax profit forecast for Qantas by almost 40%, The Australian has reported. RBS analysts have estimated that Qantas’ pre-tax profits for the 2009-10 financial year will be AU$172.1 million (US$130 million), significantly down from the US$284.5 million they had previously predicted. The airline’s net profit is forecast to improve only marginally from the AU$83.2 million in 2008-09 to AU$84.8 million.
The analysts, who maintain a “sell” recommendation on Qantas stock, see the market weakness continuing and have downgraded the carrier’s predicted pre-tax profit for fiscal 2011 by 26.6% to AU$480.2 million. The figures took into account Qantas’ decision to defer the delivery of 15 Boeing 787 Dreamliner aircraft for four years and cancel orders for 15 others, as well as updated currency and oil pricing forecasts.
“While the decline in passenger demand is showing signs of moderating, the pricing environment is still weak and seems likely to remain so for the immediate future,” analyst Mark Williams said. “We believe that rising unemployment and household deleveraging poses risks to travel demand over the next six to 12 months.”
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