Qantas records $1.25bn profit

The Qantas Group said it was continuing its investment in customers and new aircraft, supported by a $1.25 billion underlying profit before tax for the first half of FY24.

Qantas said its earnings were 13 per cent lower than the same period of FY23 as fares and capacity continued to normalise.

The airline said lower fares contributed to reduced revenue per available seat kilometre, which had a $600 million impact on profit, while freight yields fell by $146 million. However, this was mostly offset by contributions from increased flying of $485 million and the unwinding of transition costs from the post-COVID restart of $179 million. Unit cost (excluding fuel) fell by 5.2 per cent year on year.

Total flying increased by 25 per cent on an available seat kilometre basis and the group carried 3.3 million more passengers that the first half of FY23.

Qantas said travel demand remained strong across all sectors, with leisure continuing to lead and business travel now approaching pre-COVID levels. Intent to spend on travel among Qantas Frequent Flyers over the next six months remains significantly higher than most other major spending categories.

Qantas announced several major investments for customers including revealing the interiors of its new A220 aircraft, accelerated rollout of WiFi on international flights and a major upgrade to digital platforms. A double Qantas points/status credits offer for Frequent Flyers has also been launched in addition to regular domestic and international fare sales.

The group continues to invest heavily in people, including recruitment and training.

“We know that millions of Australians rely on us and we’ve heard their feedback loud and clear,” Qantas Group CEO Vanessa Hudson said.

“There’s a lot of work happening to lift our service levels and the early signs are really positive. Our customer satisfaction scores have bounced back strongly since December and we have more service and product improvements in the pipeline.

“Having the financial strength to keep investing is key, and that makes the strong performance that all business units had in the first half so important.

“We understand the need for affordable air travel and fares have fallen more than ten per cent since peaking in late 2022. At the same time, we’ve seen a cost benefit from fewer cancellations and delays, and scale benefits as more international flying returns.

“Our people have been instrumental in the initial recovery we’re seeing and I thank them sincerely. The journey we’re on will take time, but the spirit they are bringing is fantastic and it’s made us optimistic about what we can achieve together.

“I want to thank our customers and our partners for their support as we keep working to make the Qantas Group an organisation that everyone is proud of. We need to deliver a service that is consistently better to succeed long term, and that’s what we’re focused on.”

The group took delivery of eight new and mid-life aircraft during first half FY24 as its fleet renewal program ramps up. A further 14 aircraft are expected to arrive during the second half of the year.

Key dates are:

• Eight additional A321XLRs have been allocated to Qantas Domestic from the group’s existing Airbus order. This takes the total number of this type allocated to Qantas Domestic to 28 as part of the gradual replacement of its 737 fleet.
• Four additional mid-life A319s have been purchased for Network Aviation and will be based in Western Australia to help meet demand from the resources sector. These additional aircraft are expected to arrive progressively during calendar 2024, taking this fleet to nine.
• Manufacturing delays have impacted the delivery dates for the first A321XLR for Qantas Domestic by three months to early-2025 and the A350 for Qantas International (and Project Sunrise) by approximately six months to mid-2026.

The airline added that the A321LRs delivered to Jetstar were achieving a 20 per cent improvement in fuel burn per seat, contributing to a 12 per cent unit cost improvement compared with the older A320s they replace. This is helping towards the group’s interim emission reduction target of 25 per cent by 2030.

The Qantas Group ended the half with $9.2 billion of liquidity, including $1.5 billion in cash, $1.4 billion in undrawn facilities and $6.3 billion in unencumbered assets.