Qantas Airways Reports Profit Drop and Announces Share Buyback
By Roushni Nair and Lisa Barrington
(Reuters) – Australia’s Qantas Airways announced an additional share buyback on Thursday but no dividend for the fifth year, as the airline reported a 16% annual profit drop due to lower fares, spending on customers, and weaker freight revenue.
Australia’s flag carrier has been trying to fix its reputation after one of its most damaging years in 2023 due to a series of controversies regarding travel bookings and employee treatment.
Financial Performance
The underlying profit before tax for the group, which includes low-cost carrier Jetstar, fell 16% to A$2.08 billion ($1.41 billion) for the year ended June 30, matching a Visible Alpha consensus. Profit after tax declined by 28.1% to A$1.25 billion.
“Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travelers and saw benefits from its new aircraft,” said CEO Vanessa Hudson.
Qantas shares were up 0.4% at 02:50 GMT in a broader market down 0.4%.
Stable Demand
Air fares globally are decreasing from post-pandemic highs as airlines restore capacity and travelers seek savings, putting pressure on airline profits amid costs, and aircraft and labor shortages.
Qantas indicated that travel demand is stable, with domestic revenue expected to increase 2-4% year-on-year in the first half of the current financial year. While international revenue is expected to decline 7-10%, this decline is projected to slow throughout the year.
Hudson emphasized spending more on customers, noting significant improvements in operational performance and customer satisfaction at both Qantas and Jetstar.
For the fifth consecutive year, Qantas did not declare a final dividend. Instead, it announced another on-market share buyback of up to A$400 million to distribute surplus capital in the first half, following A$869 million of buybacks in 2024.
Qantas expects fuel costs in the first half to remain similar year-on-year, although finance costs and expenses associated with entering new planes into service are expected to rise. Deliveries of Airbus’s delayed A321-XLR narrow-body planes are expected from April 2025, Hudson stated.
Staff Relations
Hudson took over late last year from long-standing CEO Alan Joyce, who an external review found responsible for measures alienating travelers, employees, and shareholders, leading to a cut in his exit bonus.
Recently, Qantas has been in discussions with the Flight Attendants Association Australia (FAAA) regarding requests under ‘Same Job Same Pay’ legislation passed in December. On Thursday, Qantas and the FAAA announced an in-principle agreement on pay increases for around 2,500 international crew.
Qantas also agreed to three applications by the union to raise pay for up to 800 short-haul staff. FAAA Federal Secretary Teri O’Toole described it as a positive start to a new relationship with Qantas.
($1 = 1.4723 Australian dollars)
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