Qantas Airways Ltd. said it will offer its fourth buyback of shares in the past two years as the air carrier posted annual earnings that were better than had been expected, and marking an end of its turnaround of three years under CEO Alan Joyce.
The carrier, based in Australia, posted its second largest profit to date, and announced Friday it would repurchase up to A$373 million equal to $295 million in stock even as its shares traded close to record highs.
Qantas has returned to date A$2.1 billion to its shareholders in the past two years.
The air carrier announced as well plans to fly direct from Sydney to New York and London within the next five years, if Boeing and/or Airbus are able to build a plane with the capacity to fly that distance.
Sydney located on the eastern seaboard of Australia to London is a direct flight of approximately 20 hours, cutting close to four hours from the current trip.
The share buybacks highlight the success of Joyce’s efforts in turning around the airline through several cost cutting measures while facing intense competition from its rivals like Emirates, which now is one of its partners.
While earnings from its international business have dropped, its local market handed it a strong profit that beat estimates of analysts.
All of the segments have done well, said an industry analyst in Melbourne. Its international business has the higher risks, but it margin is reasonable healthy so a bit of space it available.
Underlying profit before taxes for its year than ended in June was down 8.6% to just over A$1.4 billion as its rivals internationally added more flights and drove down fares.
Analysts were expecting earnings to be $1.39 billion. Qantas, which once again started offering a dividend in 2016 after seven years of not offering one, kept it at 7 cents a share.
Qantas shares were up the most in nearly two months on Friday in Sydney. The stock has increased by 3.8% on Friday to extend its gains to over 81% for the year making it one of the best airline stocks.
As its international rivals added additional flights, Qantas’ earnings from its international flights dropped by 36%. Its operating profit margin in that same unit was down 3.2% ending the quarter at 5.7%, but the airline said the pace of competitors’ capacity growth is slowing.