Qantas announces profit downgrade: Midday roundup

Qantas has announced it now expects to report an underlying profit before tax for the 2011 financial year of between $500 million and $550 million, with the Chilean volcanic ash remaining a “material variable”.

Exiting a trading halt this morning, the national carrier said the damage bill from recent disruptions is $21 million.

“Given the disruptions are continuing this week, Qantas is not in a position to provide a more specific guidance range,” it said.

Qantas has come under enormous pressure recently, with delays, strikes and fuel costs all weighing heavily on the airline giant.

Overall, significant weather events and natural disasters will cost the airline $206 million, with the Queensland floods, cyclones, Japanese tsunami and Christchurch earthquake costing $185 million altogether.

But chief executive Alan Joyce said that the company is still trading well despite fuel remaining at historically high levels.

“Considering the challenges facing the aviation industry, this is a very good result – the Qantas Group’s best since the global financial crisis,” he said.

However, Joyce also noted that Qantas International remains the company’s weakest business.

Leading index predicts weak economic outlook

The Westpac-Melbourne Institute leading index, which measures the likely pace of economic activity three to nine months in the future, has reached an annualised growth rate of 2.7% in April, down from the long-term trend of 3.1%.

Westpac senior economist Matthew Hassan said in a statement that it is difficult to measure just how positive the economy can be given the recent natural disasters.

“These events have created significant distortions that will take time to drop out of the picture,” he said. “As this happens we may continue to get conflicting signals.”

“The good news so far is that even with the negative hit, the growth rate in the Leading Index does not appear to be so low as to be of major concern.”

Hassan also said it is likely the RBA will not raise interest rates during the July meeting.

“With today’s leading index highlighting both the softness of growth momentum in the first half and difficulties in judging momentum due to one-off weather effects, it’s not surprising the bank has chosen to stay in watch and wait mode.”

Hulu considering sale to Yahoo

New reports indicate that television streaming service Hulu may be considering a sale after receiving an offer from Yahoo.

As reported by the Wall Street Journal, Hulu has received a buyout offer from the internet giant. Although Hulu was originally founded by NBC and News Corp, the company has struggled when competing with film and television streaming service Netflix.

Any purchase of Hulu would likely involve costly debates over streaming rights, which have seen some networks avoid putting their own content on the site.

Shares higher after strong overseas lead

The Australian share market has opened higher this morning after strong leads from overseas markets due to renewed hope Greece will be able to navigate its way out of the current sovereign debt crisis.

The benchmark S&P/ASX200 index was up 34 points or 0.77% to 4543 at 12.00 AEST, while the Australian dollar was up to $US1.06c.

AMP shares rose 2.34% to $4.81, while Commonwealth Bank shares rose 0.94% to $50.73. NAB shares rose 0.89% to $24.86 as Westpac rose 0.79% to $21.60.

In the United States, the Dow Jones Industrial Average gained 109.63 points or 0.91% to 12,190.