Qantas expects up to $550m pre-tax profit for FY11

Qantas expects up to $550m pre-tax profit for FY11

Qantas [[xref:|(ASX:QAN)|CFOWorld] expects to report an up to 45% increase in underlying pre-tax profit for FY11, despite a $206 million impact on earnings from natural disasters.

The company is forecasting an underlying profit before tax in the range of $500 million to $550 million, which compares to $377 million from FY10.

But disasters including the Chilean volcano, the Queensland floods, the Japanese tsunami and the Christchurch earthquake are believed to have impacted profit by $206 million. This was higher than the $140 million hit that had been previously expected.

Qantas International is expected to report a loss before interest and tax of around $200 million, on invested capital of over $5 billion.

Qantas CEO Alan Joyce said Qantas International is the group's weakest business. “It has achieved required returns only three times in the past 15 years,” he said. “Clearly this situation is not sustainable.”

He said Qantas is formulating a long-term strategy to turn around the underperforming business, and will announce its plans later in the calendar year.

Higher fuel prices also impacted second-half earnings, Joyce said, but added that fuel hedging has helped offset this somewhat.

The company announced it had settled with Rolls-Royce over a malfunctioning engine and the subsequent temporary grounding of its entire A380 fleet.

While the terms of the settlement are confidential, Qantas said the settlement will positively effect earnings for FY11 to the tune of $95 million.

QAN shares grew 0.27% on Wednesday to $1.830.

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Tags QantasAlan Joycecourt actionnatural disasterGuidanceturnaroundASX:QAN

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