Qantas reports record annual loss

The national flag carrier has said for many months that it has been facing tough competition in both international and domestic markets

Australia's national flag carrier Qantas has reported a net loss of 2.8bn Australian dollars ($2.6bn; £1.6bn) for the year to June - its biggest ever annual loss.

The struggling airline said the result was in part due to an A$2.6bn write-down on its international fleet.

Analysts were expecting a net loss of around A$750m.

Qantas said weak domestic demand, poor consumer spending and rising fuel costs also contributed to the huge loss.

It is the worst result in the company's history and compares with a revised after-tax profit of A$2m a year earlier.

One-off costs associated with redundancies contributed to the full-year loss, though, and the firm said its current underlying financial position was strong and improving.

The firm's underlying loss before tax for the year ending in June amounted to A$646m

Qantas has been trying to cut costs this year amid tough conditions

"There is no doubt today's numbers are confronting," said the carrier's chief executive officer, Alan Joyce, "but they represent the year that is past".

He added that the airline would return to underlying profit in 2015.

Mr Joyce also confirmed the carrier would not sell its popular frequent flyer programme.

"Our cash balance and liquidity position is strong," he said, "and the group's overall financial performance is rapidly improving."

Despite the losses, Qantas's shares ended the day up by nearly 7%.

But Peter Esho, managing partner of wealth management firm 100 Doors, said the firm's report card was "inadequate".

"I don't buy into the underlying numbers," he told the BBC.

"At the end of the day shareholder value is being destroyed and there needs to be accountability at the board and management level."

He said a return to profit assumed too many variables that could be used as excuses for another poor year.

"It's an avoid for me until there is a significant change in the board and management of this business."

Tough times

The national flag carrier has said for many months that it has been facing tough competition in both international and domestic markets.

Qantas formed an alliance with Emirates in 2013 after many years with British Airways

It has been engaged in a price war in its domestic market with competing airline Virgin Australia.

The carrier had also argued the Australian government's laws that restricted it from accessing foreign funding had hampered its ability to compete with other airlines.

Lawmakers in Australia recently agreed to relax those laws, which prevented a foreign investor from owning more than 25% of the carrier.

Qantas last year also won approval for a new partnership with the Dubai-based airline Emirates - a move that was seen as key to the firm's attempts to revive around its loss-making international operations.

But in February this year, after reporting a heavy half-year financial loss, Qantas said it would cut 5,000 jobs.

Some 2,500 of those jobs cuts have been completed.

They make up part of the carrier's plans to reduce costs by A$2bn over the next three years.

"After an extremely difficult period, we are focused on building momentum with our turnaround in [the next 12 months]," said Mr Joyce.

------------------------------------------

"At the end of the day shareholder value is being destroyed and there needs to be accountability at the board and management level”

Peter EshoManaging Partner, 100 Doors