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Competition pressures have seen Qantas’s profit slide in the December half, but the Australian carrier has now positioned itself as one of the most profitable airline groups in the world.

Net profit in the six months ended December 31 dropped 25.1 per cent to A$515m ($496.3m) on a 3.3 per cent drop in revenue to A$8.18bn, however the company noted the drop in statutory profit was due to the inclusion in the previous year’s result of a A$201m gain from the sale of Qantas’s Sydney Airport terminal.

Underlying profit before tax fell 7.5 per cent to A$852m, which came in above the company’s guidance range.

Among its main passenger divisions, both the Domestic and International units saw earnings retreat in the December half, although Jetstar Group, which is growing strongly in Asia, enjoyed a 5 per cent boost for a record result. Management noted that profitability in the International business, which saw earnings fall 23 per cent, was hurt by “high levels of capacity growth affecting all major airlines, but is achieved significantly higher margins than the industry average.”

Alan Joyce, Qantas chief executive, said the company “was one of the best performing airline groups in the world” and pledged to stay disciplined on capacity and keep downward pressure on costs. The company held its operating margin steady at 12 per cent, which is high by industry standards.

Qantas’s board declared an interim dividend of 7 Australian cents, 50 per cent franked, per share, as it continues its efforts to return earnings to shareholders.

Investors cheered the result, with shares up 4.1 per cent in morning trade and having been up as much as 6.5 per cent.

Copyright The Financial Times Limited 2017. All rights reserved.
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