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Qantas ends seven year dividend drought

AAP logoAAP 24/08/2016 Lilly Vitorovich

Qantas will pay a dividend to its long-suffering shareholders for the first time in seven years after the airline's full-year profit rose by 85 per cent to $1.03 billion, underpinned by a major operational overhaul and low oil prices.

Chief executive Alan Joyce said the airline was now "a more agile business" and had a platform to invest for the future as a result of the transformation program that has cut thousands of jobs, revised the airline's fleet and unlocked $1.66 billion in cost and revenue benefits since early 2014.

"Our transformation program is paying dividends for our shareholders, our customers and our employees," Mr Joyce said on Wednesday.

After a turbulent few years and a capacity war with Virgin Australia and cashed-up international carriers, Qantas has declared a fully franked final dividend of seven cents a share, its first since 2009.

The dividend, costing $134 million, will be part of a $500 million capital return announced on Wednesday, with the remaining $366 million committed to an on-market share buyback.

Qantas will also give its 25,000 employees - who have been subject to a wage freeze under the transformation program - a cash bonus of up to $3,000 each.

Qantas's underlying pre-tax profit jumped 57 per cent to $1.53 billion, its best result in its 95-year history.

Around two-thirds of earnings came from its domestic operations and loyalty business, and the rest from its international unit.

Domestic unit underlying earnings lifted 20 per cent to $578 million as cuts to flights limited the impact of weaker demand at the end of the year, while Qantas Loyalty signed up 580,000 new members.

Improved margins and falling costs helped its budget carrier, Jetstar, increase earnings by 97 per cent to $452 million.

International earnings rose 92 per cent to $512 million, helped by cost cutting and revenue growth as planes were added.

Qantas booked a gain of $664 million on the back of lower global fuel prices.

Mr Joyce expects the strong performance to continue in the first half of 2016/17 with total capacity growth of two to three per cent, driven by strong international demand from China and Japan. Domestic capacity is forecast to be flat or down one per cent.

Facing intense competition, particularly from Virgin Australia and Emirates, Qantas plans to roll out wifi on some domestic services next year and is looking to live-stream cricket over summer.

Qantas shares gained five cents to $3.45.

Qantas will return another $500 million to shareholders after posting a 85 per cent jump in net profit to $1.03 billion. © REUTERS/David Gray Qantas will return another $500 million to shareholders after posting a 85 per cent jump in net profit to $1.03 billion. QANTAS PROFIT SOARS

* Net profit up 85pct to $1.03b

* Revenue up 2.4pct to $16.2b

* Final dividend of 7 cents, first in seven years

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