Qantas to spend profits on $A1b share buyback

Qantas Airways Ltd, Australia's largest airline, posted a 50 per cent rise in annual earnings as expected today as passenger demand offset higher fuel costs and announced a $A1 billion ($NZ1.2 billion) share buyback.

The airline, whose shareholders rejected a $US9 billion buyout bid in May, forecast higher profits this year with forward bookings strong and confirmed it was looking at a new ownership structure for its main business units.

Qantas shares rose 1 per cent to $A5.33 at 0018 GMT on the result, which was broadly in line with expectations. The buyback was widely expected after being flagged by the company in May.

Net profit for the year to June 30 was $A720 million compared with $A479.5 million a year ago.

The result included a $A47 million provision against potential liabilities from a price-fixing probe, bringing the result roughly in line with analysts' consensus of $A776 million, according to the mean of eight analyst forecasts on Reuters Estimates.

Soaring appetite for air travel and cost cuts have helped Qantas and other airlines boost profits compared to a year ago, when redundancy costs from a wave of job cuts and soaring fuel bills hurt Qantas' earnings.

"The first six weeks of 2007/08 have been very strong for all our flying businesses and forward bookings are equally buoyant through to the end of the calendar year," Qantas said in a statement, tipping a 30 per cent rise in pre-tax profit this year.

The result was in line with other regional carriers. Shares in Cathay Pacific Airways Ltd hit all-time highs last week after it tipped a strong second half, while Singapore Airlines was also upbeat about demand for air travel.

Qantas reiterated it was reviewing the ownership of its frequent flyer programme and freight business, and was looking at a separate vehicle to finance some or all of its fleet of aircraft.

Qantas, dubbed the Flying Kangaroo, expected to make more orders for new aircraft in the next two months.

"We have $A25 billion of orders out there right now and we fully expect to be making more orders within the next two months," chief executive Geoff Dixon told reporters.

Qantas shares had fallen more than 8 per cent in the past two weeks in line with the broader market.

A consortium including Macquarie Bank Ltd and private equity firm TPG lost a $A5.45 a share offer for the airline in May when key shareholders rejected the bid.

Qantas declared a final dividend of 15 cents a share.

- Reuters