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15:28 pm====At 1520 AEDT, shares in Qantas had lost five cents, or 1.74 per cent, to $2.83.
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Date Posted: 28/10/10 21:50:01
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.Fri 29 Oct 2010 15:44 - Australia Markets close in 16 mins.
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Qantas says recovery patchy, Asia prospect
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EmailPrint.Topics:Stock MarketAustralian Dollar & Currency NewsCompany News & Earnings.On Friday 29 October 2010, 15:28
Qantas Airways Ltd has defended its no dividend policy, saying the global economic recovery remains "patchy" while the domestic business market is recovering.
The airline says it's not sure when dividends will return, given the ongoing fleet renewal program future payments will be assessed against the airline's capital requirements.
Qantas says the business market within Australia is returning, while the leisure travel market is suffering as low-cost competitors increased flights.
"Globally, we are seeing a recovery and that is flowing through to our international business," Qantas chairman Leigh Clifford told the company's annual general meeting on Friday.
"But it is early days and it is patchy. There remain challenges for two of our biggest markets, the US and the UK."
Qantas has 158 aircraft on order, worth $US17 billion ($A17.41 billion), but denies having a cash flow problem.
Mr Clifford said Qantas must maintain its investor grade credit rating so interest rates remain low on its significant borrowings.
"Over the coming period the Qantas Group will need to service its very high capital requirements, including in fleet renewal, and retaining a high credit rating remains a priority."
"With this in mind, the board decided not to pay an interim or final dividend in 2009/2010 and future dividends will need to be assessed against ongoing earnings performance and capital requirements."
The Qantas A380 fleet will grow to 20 over the next five years, with 10 in service by the beginning of 2011.
The chairman also defended the airline's wage policy, saying executive pay had been frozen since early 2008.
"Frankly, I think that was admirable restraint by the management team and staff at Qantas," he said.
Qantas employees, who want a five per cent wage increase, confronted the board and shareholders at the meeting.
"Qantas continues to have some of the best remunerated executives around the world, whereas the remuneration policy for non executive staff is designed to drive remuneration downwards," a union representative said.
A former worker, Malcolm Fraser, added: "Improved share performance might be expected with a reduction in the pay gap between the executives and the ordinary staff of Qantas."
At 1520 AEDT, shares in Qantas had lost five cents, or 1.74 per cent, to $2.83.
Mr Clifford said the strong Australian dollar was a mixed blessing for Qantas, as it boosted overseas travel at the expense of domestic tourism.
"While the Australian dollar's strength has been a positive impact on the group's US dollar costs, this has been partially offset by a fall in the value of foreign currency revenues and the increases in fuel prices of late," he said.
"A strong Australian dollar also has an impact on inbound and outbound travel patterns."
Qantas chief executive Alan Joyce said the world's largest aviation market, the Asia-Pacific, offered significant opportunities.
"Looking ahead, there are many challenges, but also one unmistakable opportunity," he told investors.
"By 2013, (the) International Air Transport Association (IATA) predicts that Asia-Pacific's market share will grow to almost one-third of total global passenger traffic.
"Significant opportunities will be unleashed, and the Qantas Group will be there to participate."
Vietnam, a country with 87 million people, was providing Jetstar Pacific with a major opportunity, Mr Joyce said.
"Capitalising on Asian economic growth is clearly a long-term project, but the Qantas Group is exceptionally well-placed to do so," he said.
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