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Qantas profits fall by 17 per cent to $852 million, buyback scheme launched: Qantas financial results 2017

Qantas Launches New Flights between Melbourne and Exmouth

Qantas today reported an Underlying Profit Before Tax of $1,401 million and a Statutory Profit Before Tax of $1,181 million for the 12 months ended 30 June 2017.

The underlying result represents the second highest performance in Qantas’ 97 year history, down 8.6 per cent compared with last year’s record. It is slightly above the guidance range provided in early May this year, mainly due to strengthening of the Group’s domestic businesses. A drop in statutory profit before tax of $243 million reflects that the FY16 result included the gain on sale from the Sydney Domestic Terminal.

Overall, the FY17 performance shows the Qantas Group’s margin advantage over local and global competitors[1] , which has been underpinned by completion of its three year transformation program.

SUMMARY OF RESULT

In the domestic market, Qantas and Jetstar combined reached a record $865 million Underlying EBIT, making them again the two most profitable airlines in Australia with around 90 per cent of the total domestic profit pool.

Qantas International, which has faced high levels of capacity growth in the broader market, saw an improvement of conditions in the second half; it posted an Underlying EBIT of $327 million. Continued strength in its core markets helped the Jetstar Group deliver the second highest profit in its 13 years of operation.

Qantas Loyalty booked a record $369 million Underlying EBIT on a 4 per cent increase in revenue as it continued to diversify its earnings.

The Group met all the objectives of its financial framework, reporting a 12-month return on invested capital of 20.1 per cent.  Another $470 million in transformation benefits were delivered, completing the three year program and outperforming the $2 billion target by $125 million.

The Qantas Transformation Program has underpinned these results and enabled the Group to outperform its key domestic and international competitors.

This performance means Qantas is able to reward shareholders, recognise the hard work of its people and invest for customers.

RETURNS FOR SHAREHOLDERS

The Qantas Board has declared a dividend of 7 cents per share (unfranked) to be paid on 13 October 2017 with a record date of 11 September 2017.

A further on-market buyback of up to $373 million has been announced. Once this latest buyback is completed the number of Qantas shares is expected to have been reduced by more than 20 per cent since October 2015.

Since the transformation program began in February 2014, the total return for Qantas shareholders – including share price appreciation and distributions – has been around $9 billion. This has made the Group the top performer on the ASX100.

INVESTING FOR CUSTOMERS

The Group will continue to invest in new aircraft, upgrading cabins and lounges, and extending its network of destinations.

The airline’s fleet of 12 Airbus A380s will receive a significant upgrade to improve passenger comfort as well as route economics (see separate release). This will include replacing Skybeds in Business Class with the latest version of the Business Suite; increasing the size of the Premium Economy cabin and installing the same all-new seats that will debut on the Dreamliner at the end of this year; and refurbishment of the Economy and First Class sections. Work will begin in the second quarter of calendar year 2019.

Both the Business and Qantas Club lounges at Melbourne Domestic will be progressively renovated from November this year, providing customers more space, comfort and dining options before they fly. (See separate release)

New lounges at both ends of the landmark Perth-London route will be completed during FY18, and two remaining A330s will have their cabins upgraded following lease extensions.

The rollout of Wi-Fi on the Qantas Domestic network (A330 and 737 aircraft) is expected to accelerate in late September 2017, once the current trial is complete and final regulatory approval for the new service is confirmed.

Jetstar will invest in additional service training for 4,000 of its frontline employees as it continues to stimulate new travel demand with low fares. The airline will start a new route from Melbourne to the Central Chinese city of Zhengzhou from December 2017, which is expected to bring 35,000 Chinese tourists to Australia a year.

Aerospace

Pakistan’s Ambitious Plan to Acquire and Produce Chinese FC-31 Stealth Fighter

Pakistan’s Ambitious Plan to Acquire and Produce Chinese FC-31 Stealth Fighter

Pakistan is embarking on an ambitious endeavor to bolster its air defense capabilities with the acquisition and potential local production of the Chinese FC-31 stealth fighter jet.

Talks are reportedly underway between the Pakistan Air Force (PAF) and the Shenyang Aircraft Corporation, the developer of the FC-31, signaling a significant leap forward for Pakistan’s military aviation prowess.

The FC-31, a mid-sized, twin-engine fifth-generation fighter, promises advanced air combat capabilities, including stealth technology that surpasses anything currently in the PAF‘s fleet. With plans to retire the JF-17 production line by 2030, the FC-31 could emerge as the new flagship aircraft, offering unmatched performance and versatility.

Experts speculate that Pakistan’s interest in the FC-31 could also signal broader implications for the international market. As China develops both land and carrier versions of the FC-31, analysts foresee it becoming a cost-effective alternative to pricier options like the F-35, potentially challenging the dominance of the US aerospace industry and reshaping global strategic rivalries.

Adding complexity to the deal is China’s push for the WS-13 engine, previously rejected for the JF-17 but now under consideration for both the FC-31 and future JF-17 variants. Engine standardization could streamline logistical and maintenance processes for the PAF, further enhancing the appeal of the FC-31.

While negotiations continue, the success of the FC-31 acquisition and local production hinges on several factors, including the outcome of the WS-13 engine discussions. Pakistan’s pursuit of the FC-31 comes amidst its eagerness to replace its aging fleet, with previous attempts to upgrade its F-16s by the United States due to geopolitical pressures.

Amidst these developments, Pakistan previous interest in the Turkish-made Kaan fifth-generation fighter underscores its eagerness to replace its aging fleet. Despite previous attempts to secure upgrades for its F-16s from the United States, Pakistan’s quest for advanced aerial capabilities has led it to explore alternative avenues, with the FC-31 emerging as a promising contender in its pursuit of air superiority.

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Aviation

China’s Indigenous HH-100 UAS Successfully Completes First Flight

China’s Indigenous HH-100 UAS Successfully Completes First Flight

In a significant milestone for China’s aviation industry, the HH-100 aerial commercial unmanned transportation system successfully completed its maiden flight, as announced by the Aviation Industry Corporation of China (AVIC) on Wednesday.

The HH-100 demonstrator took to the skies for its inaugural flight at a general aviation airport in Xi’an, located in northwest China’s Shaanxi Province. This successful test was conducted by AVIC, China’s leading aircraft manufacturer, marking a pivotal step in the development of the country’s unmanned aerial vehicle (UAV) capabilities.

Developed independently by AVIC XAC Commercial Aircraft Co., Ltd., a subsidiary of AVIC based in Xi’an, the HH-100 consists of two main components: an unmanned aerial vehicle and a ground-based command-and-control station. This innovative system is designed to offer a cost-effective, high-payload solution for various transportation and logistical needs.

The HH-100 is notable for its low cost and large tonnage capabilities. With a designed maximum take-off weight of 2,000 kilograms and a payload capacity of 700 kilograms, it can transport approximately 4 cubic meters of cargo over a range of 520 kilometers. The drone’s maximum cruise speed is 300 kilometers per hour, and it can operate at altitudes up to 5,000 meters.

Primarily intended for feeder logistics, the HH-100 is also equipped to participate in a variety of other roles, including forest and grassland firefighting, fire monitoring, transportation and delivery of rescue materials, relay communication, and artificial rain enhancement. This versatility makes it a valuable asset in both commercial and emergency response operations.

Looking ahead, AVIC plans to develop a series of products based on the HH-100 platform, with models capable of carrying 5 tons, 10 tons, and even larger payloads. These future developments aim to meet the growing demand for large-scale, intelligent, low-cost, and highly reliable unmanned cargo planes.

The HH-100’s successful first flight marks an important achievement for AVIC and China’s aviation sector, showcasing the potential of homegrown technology to advance the country’s capabilities in unmanned aerial transportation. With its impressive range of features and applications, the HH-100 is poised to play a significant role in enhancing air-ground transportation connectivity and addressing various logistical challenges in the region.

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Aviation

Russia’s Venture into Spare Parts Production for Western-Made Jets

Russia's Venture into Spare Parts Production for Western-Made Jets

In a strategic move to mitigate the challenges posed by the shortage of spare parts for foreign-made passenger aircraft, Russian carriers are charting a new course by turning to domestic alternatives. At the forefront of this shift are two groundbreaking projects unveiled at the St. Petersburg International Economic Forum on June 6.

Leading the charge is Protektor Group, a prominent Russian MRO provider, which has committed a substantial investment of RUB3.5 billion ($39 million) to establish a cutting-edge facility near Moscow Domodedovo airport.

This facility is slated to specialize in the production of spare parts tailored for Airbus A320 and Boeing 737 narrowbody jets, with operations expected to commence in 2026. With a projected workforce of 800 employees, the facility aims to address the pressing demand for critical components in the aviation sector.

This initiative aligns seamlessly with broader governmental endeavors outlined in June 2022, which envisioned the manufacture of 1,036 airplanes using solely Russian parts by 2030. Bolstering this ambition, the state allocated a substantial sum of 283 billion rubles (U.S. $3.1 billion) in January 2024 to propel the production of 609 aircraft, with a particular emphasis on medium-haul models.

Protektor’s trajectory towards this pivotal milestone has been marked by notable achievements, including receiving production organization approval from Rosaviatsia in 2024. Prior to this, the company had earned certification for the overhaul of landing gear for Boeing 737s, solidifying its position as a trusted entity in aircraft maintenance.

Beyond the realm of spare parts production, the Russian aviation industry is poised for a significant transformation as it gears up to redefine its identity. Sergey Chemezov, the head of Rostec, the state-owned conglomerate overseeing aerospace, engineering, and defense sectors, has unveiled ambitious plans to resurrect the renowned ‘Yakovlev‘ brand. This rebranding initiative extends across the spectrum of Russian-made airliners, signaling a new era of innovation and prominence.

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