Sydney: Top Australian airline Qantas Airways Ltd said first-half profit fell 66%, hurt by high fuel costs and a downturn in international travel, and flagged a A$500 million ($322 million) equity raising to repay debt.
Qantas, like many other airlines, is battling slumping demand for air travel as the global economy faces its worst financial crisis since the Great Depression. Airlines have responded by trimming capacity to adjust to the worsening demand.
Qantas, which will also use the funds to renew its fleet, said it was not immune to the global recession, but reconfirmed profits before tax for the full year would be around A$500 million.
Qantas cut its full-year profit forecast by 65% in late November and said it had made capacity reductions equivalent to grounding 10 planes.
Global passenger traffic will fall 3% this year, the first drop since 2001, and airline losses will total $2.5 billion, putting hundreds of thousands of industry jobs at risk, the International Air Transport Association (IATA) said in December.
“The aviation sector is experiencing a high degree of volatility,” chief executive Alan Joyce said in a statement.
Qantas said on Wednesday it will cut its fiscal year 2010 capacity growth to 2% from 10% planned earlier. Its net debt at end December was A$6.46 billion, up 38% from end June.
Australian companies have gone into capital raising overdrive, with several blue-chip companies including Wesfarmers Ltd and Westfield Group, having already announced about A$7 billion worth of share sales so far in 2009.
Difficult credit markets are forcing companies to turn to equity markets to meet their funding needs, analysts said, and they expect more companies to tap share markets for capital.
Qantas’ profit after tax dropped to A$210 million for the six months to 31 December, down from A$618 million in the previous corresponding period. That compared with A$218 million, according to Reuters Estimates.