Qantas Loyalty has reported its fifth straight year of double digit earnings growth in an otherwise calamitous set of financial results for the troubled airline.
The loyalty division was the one shining light as Qantas posted an underlying loss before tax of $646 million. Hefty restructuring costs and writedowns to its fleet saw the statutory loss sink to a $2.8 billion.
Qantas Loyalty posted record earnings before interest and tax of $286m, a 10 per cent rise on the previous year. The number of loyalty members climbed 720,000 to 10.1 million since June 2013 while award redemptions increased 11 per cent to 6.2m.
The airline started a massive cost cutting exercise earlier this year which resulted in 40 per cent of the broader marketing team being lost.
Qantas added it will form a new holding company for its international division which posted an underlying EBIT of $497m, double the loss in FY13. It hopes the move, sparked by a relaxation of rules over foreign ownership, will “increase the potential for future investment”.
Qantas chief executive Alan Joyce described the financial result as “confronting” but insisted the airline has “now come through the worst”.
“With our accelerated Qantas Transformation program we are already emerging as a leaner, more focused and more sustainable Qantas Group,” he said.
Joyce admitted that the airline toyed with a partial sale of the loyalty division but concluded there was “insufficient justification” for such a move.
“Due to the strong support of our customers and partners, Qantas Loyalty is a standout business, achieving a new record result for the year with double-digit growth,” he said. “After careful consideration our judgement was that Qantas Loyalty continued to offer major profitable growth opportunities and there was insufficient justification for a partial sale.
“To continue to realise the value in Qantas Loyalty we will be innovating, investing, working closely with our partners and rewarding the loyalty of our customers with even more ways to earn and redeem points.”
Its domestic services reported an underlying EBIT of $30m, down from $365m while Jetstar Group reported a loss of $116, down from a $138m profit last year.