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Qantas warns of industry headwinds

AAP logoAAP 21/10/2016 Lilly Vitorovich

Qantas is not immune from headwinds impacting the airline industry despite making a record underlying profit last financial year, chief executive Alan Joyce has warned shareholders.

"Like most other global carriers, intense competition on international routes means we're seeing air fares below where they were 12 months ago," Mr Joyce told the company's annual general meeting on Friday.

"And the economic transition in Australia and broader geopolitical issues in the northern hemisphere continue to have an impact on aviation markets globally."

Chairman Richard Clifford said the airline hopes to once again benefit from a low fuel bill in the current financial year.

"Despite the recent rise in oil prices, our disciplined hedging program means we are well placed to ensure that the group's fuel bill is no higher this year than last year," Mr Clifford told the meeting.

Qantas enjoyed a $664 million benefit from lower global fuel prices in 2015/16, and its bill totalled $3.2 billion.

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

The airline is also paying its first dividend in seven years after its net profit soared 85 per cent to $1.03 billion, driven by benefits from its operational overhaul and the lower fuel costs.

Mr Joyce said the airline needs to remain disciplined on costs and managing its capacity to match demand, but is also seeking to secure long term competitive advantages.

That includes its focus on Asia, particularly the burgeoning Chinese travel market, for passenger and revenue growth.

Qantas will relaunch its daily service from Sydney to Beijing on January 25, which will boost the airline's total capacity into China by 18 per cent.

Qantas also flies direct to Hong Kong and Shanghai, and more than 50 per cent of the company's capacity will be allocated to Asia once the Beijing route commences.

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