Hong Kong Protests Set Qantas Back $25 Million

Following a busy week after launching its record-breaking flight from New York to Sydney, Qantas has announced its first-quarter revenue figures. The airline shared that demonstrations in Hong Kong, along with disputes between the United States and China had a negative impact on its profits.

Qantas at Hong Kong
Qantas operates many key flights at Hong Kong International Airport. Photo: N509FZ via Wikimedia Commons

A strong year

Yahoo News reports that, despite an increase in revenue, the Australian flag-carrier will feel a slump in profits due to the issues in the Asian country. Altogether, there has been a 1.8 percent increase in revenue in the first quarter of its financial year. Qantas made a whopping Aus$4.6 billion ($3.14 billion), compared with Aus$4.49 billion ($3.07 billion) in the previous year.

This rise has been credited to Qantas’ strong international performance, where it saw a 4.4 percent increase in revenue. The growth of the company’s domestic market income wasn’t so strong, with a 0.5 percent raise.

Hong Kong Protests
Hong Kong has seen a huge scale of demonstrations as part of the Anti-Extradition Law Amendment Bill. Photo: Studio Incendo via Flickr

Troubles in China

Altogether, the group saw strong commercial performances in the first quarter. However, it warned of the impact that the Chinese economy will have on its first-half profit margins.

“Protests in Hong Kong will negatively impact the group’s first-half profit performance by Aus$25 million, with ongoing capacity reduction in place to minimize the second-half impact,” Qantas said in a media release.

“Further deterioration in global trade conditions has impacted freight demand with an expected profit impact of Aus$25-30 million for the full year.”

Ultimately, the demand for Hong Kong flights dropped by 10 percent in the summer. In response to the shift, Qantas scheduled smaller airliners with less capacity for its Hong Kong operations. In addition, the airline states that further deterioration in global trade conditions has had an impact on cargo operations, giving an Aus$25-30 million ($17-20 million) impact on profits for the year.

Boeing 747-400
Despite troubles in Hong Kong, Qantas still reported healthy income figures. Photo: Aero Icarus via Wikimedia Commons

A positive response

Qantas Group CEO Alan Joyce has spoken highly of his company’s ability to respond well to mixed market conditions. The businessman said that his employees are dedicated to reduce costs, to help adapt to the changing environment.

“The Group continues to perform well, with strength in key parts of our portfolio helping to offset softness in other areas,” Joyce said, as per the release.

“Given the slower revenue environment, we have a strong focus on cost reduction to make sure we keep delivering on our transformation targets. Part of this is about taking opportunities to reduce complexity and constantly improving how efficiently we manage our business.”

It is a bittersweet report for the airline as, despite record-breaking numbers, it lost out on crucial operations. Along with the drop in demand, protesters continued to disrupt flights and passengers at Hong Kong International Airport. Qantas will be hoping that China can sort its disputes soon as it remains a key region for its services.

Simple Flying reached out to Qantas but did not hear back before publication. We will update the article with any further announcements. What do you think of Qantas’ revenue figures? Let us know your thoughts in the comments.