Qantas is expecting economic headwinds and record high fuel prices to create more turbulence.
Average airfares per passenger are forecast to fall in fiscal 2014, as the flying kangaroo faces sluggish demand for air travel.
Addressing shareholders at the company’s annual general meeting in Brisbane, chief executive Alan Joyce said record group fuel costs would be a huge burden as the Australian dollar remained below parity with the US greenback.
“Group fuel costs will be a record for any half year – a massive cost impact that will affect our international business in particular,” he said.
“Given the high degree of volatility in the competitive environment, global economic conditions, fuel prices and exchange rates it is not possible to provide earnings guidance at this time.”
Weak underlying demand and competitive pressures in the domestic and international travel markets would cause yields – a measure of average airfares per passenger – to fall by between two and three per cent in the first half of 2013/14, he added.
There would also be a “lag effect” between a rise in business confidence and an increase in demand.
“The Australian economy is in transition, affecting many of our corporate clients – from the mining sector to financial services,” Mr Joyce said.
Chairman Leigh Clifford said the tough domestic market conditions experienced during the last financial year were unlikely to ease soon.
“We have not yet seen the rise in business confidence following the election translate into any discernible increase in demand for domestic or international travel,” he said.
Shareholders approved of a plan to grant Mr Joyce bonuses every three years, if certain performance targets were met, but the Australian Shareholders Association’s Richard McDonald objected, arguing it should be awarded every four years.
“We do not have a problem with Mr Joyce participating in the long-term incentive plan but we do have a problem with the plan itself,” he said.
Mr Joyce’s base salary during the last financial year remained unchanged at $2.1 million, but cash bonuses and deferred share payments took his total remuneration package to $3.3 million.
The Qantas remuneration report passed, with 98.7 per cent shareholder support.
Mr Joyce earlier told shareholders Qantas would review the future of its Avalon heavy maintenance base, in Melbourne, for soon-to-be retired Boeing 747s, “with a decision to be made in coming weeks”.
Qantas shares fell six cents, or 4.05 cent, at $1.42 at 1442 AEDT.
