Psst … Qantas is tipping $1b plus

QANTAS has posted its fourth profit upgrade this financial year, reinforcing the view the failed $5.45 a share Airline Partners Australia takeover bid had seriously undervalued the airline.

The carrier, however, did not appear too keen to spruik its latest upgrade, which came just three days before the end of the fiscal year and two months since the collapse of the $11.1 billion Macquarie-led takeover bid.

At the bottom of a statement which confirmed Qantas had sold its remaining 4.2 per cent stake in Air New Zealand, the airline said it "remained comfortable with its previous guidance that its 2006-07 profit before tax was in line with the average of market expectations".

Given Qantas's strong load and traffic figures have led analysts to lift their forecasts in the three months since the previous upgrade, the comment translates into a 13 per cent profit upgrade.

In March Qantas forecast a $940 million pre-tax annual profit. Yesterday the median of analyst forecasts calculated by Bloomberg predicted a record $1.06 billion pre-tax profit.

The Qantas board is also expected to consider a "capital management scheme" at its next meeting, on July 18. It could decide to make a special dividend payment to shareholders or instigate a share buyback.

Analysts estimate the airline's relatively low levels of debt could allow it to pay back $2 billion to its shareholders.

Despite yesterday's untrumpeted upgrade, Qantas shares fell 9c to $5.52 amid concerns the Singapore-based Tiger Airways could spark a domestic airfare war this summer.

The Singapore Airlines part-owned budget airline yesterday announced it would launch its first domestic flight, between Melbourne and Darwin, on December 1, offering $80 one-way fares.

Tiger is also looking to challenge the Qantas-owned Jetstar's share of the low-cost market into Asia by offering "combo" fares to its Singapore base, via Darwin. It is offering $499 return fares between Melbourne and Singapore.

Read the news release of this article's source at Sydney Morning Herald by Scott Rochfort