Alan Joyce, the combative chief executive of Qantas, has had a week he would rather forget. After heavy trading, the share price of Qantas Airways closed below A$1 for the first time yesterday as it was put on notice of a possible downgrade by Standard Poor’s and investors continued to worry about the possibility of a capital increase.
While Qantas claims it has a “strong funding position” and the flexibility to “further reduce” capital investment, few investors seem prepared to give the carrier and its Irish-born leader Mr Joyce the benefit of the doubt following Tuesday’s dire trading statement. Blaming everything from rising fuel prices to falling bond yields, increased competition on domestic routes and European services, Mr Joyce said Qantas would post its first annual net loss since privatisation in 1995.
The unexpected warning threw into sharp relief the task Mr Joyce faces in returning its international business to profitability. The airline is also saddled with a cost base substantially higher than that of its competitors. – (Copyright The Financial Times Limited 2012)