Qantas Airways, Australia's largest carrier, pointed to early signs of a pick-up in air travel after posting its first half-year loss in six years as the industry battled the worst global recession in decades.
But the loss was smaller than analysts expected, and comments that yields, which measure revenue per miles travelled, have stabilised helped lift the airline's shares by as much as 6 per cent.
The cautious outlook came as airlines around the world have been cutting capacity and jobs to deal with the slump in business and holiday travel, aggravated by the outbreak of the H1N1 swine flu virus.
“Everybody was assuming the worst and Qantas delivered a slightly better than expected result,” said Constellation Capital Management investment analyst Brian Han.
“But they made it pretty clear the yields stabilised at a pretty low level so it's not much to sing about,” he added.
The airline also announced further cost-cutting measures totalling A$1.5 billion over three years, but the group baulked at giving a profit outlook, saying business conditions were too uncertain.
It swung to a loss of A$93 million ($77 million) in the six months to June 30th from a profit of A$351 million a year ago, according to Reuters calculations.
It was the first loss for a six-month period since the SARS outbreak in 2003, and only the second since Qantas listed on the stock exchange in 1995.
By 3.16am, Qantas shares were up 5 per cent at A$2.73 after rising as high as A$2.77, compared with the broader market up 0.8 per cent.
Qantas's five-year credit default swaps, which offer protection against defaults on debt, tightened but in line with the rest of the market.
They were quoted at 163 basis points today, down from 170 bps yesterday, according to a RBS trader.
Still, Qantas Chief Executive Alan Joyce said there were signs of an improvement in passenger volumes, and yields had stabilised at levels seen in the six months to June, when demand for travel was hit by the economic slowdown.
He also announced plans to lease extra capacity for the budget carrier Jetstar.
The International Air Transport Association forecast in June that global airlines could lose $9 billion this year, nearly double its previous estimate.
Reuters