Qantas Airways Updates Revenue Forecast

(Reuters) – Australian flag carrier Qantas Airways on Friday lifted revenue expectations from its domestic operations for the first half of the financial year, while forecasting lower fuel costs after a drop in global prices.

The airline is now expecting revenue per available seat kilometre for its local business to increase by 3% to 5% for the first half ended Dec. 31, compared to a year ago, up from the 2% to 4% range it provided in August.

Qantas' low-cost airline Jetstar's revenue was better than previous estimates, reflecting improved travel demand.

> "Qantas Domestic's load factors and demand for corporate travel continue to improve year on year," the carrier added on Friday, referring to its main brand.

Domestic capacity is expected to rise by 1% in the first half, down from the 2% rise forecasted in August.

Qantas shares reached a record high this week after Jefferies analysts hiked their price target due to low fuel costs and expectations of a dividend payment. Under CEO Vanessa Hudson, the flag carrier is working to rebuild its reputation, which was damaged over the last 18 months amid legal, regulatory, and customer issues.

The airline will hold its annual meeting later on Friday.

The airline is now expecting first-half jet fuel costs of about A$2.55 billion (approximately $1.69 billion), lower than the previous estimate of A$2.7 billion.

Qantas' current fuel cost estimate is based on a current jet fuel price of A$140 a barrel, down from A$150.

The firm noted its A$400 million share buyback was currently 45% complete at an average price of A$7.23. The airline anticipates finalization by the end of the year.

Trading in Qantas' loyalty program was in line with expectations, following the launch of a new flight rewards scheme. The loyalty division expects at least 10% growth in underlying earnings before interest and taxes in the current financial year.

($1 = 1.5060 Australian dollars)