Qantas Posts Record Half Year $1.43 Billion Profit

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February 23, 2023
Qantas
Qantas 787. Credit Richard Kreider

Qantas, Australia’s largest airline, has posted a record half-year A$1.428 billion underlying profit before tax on the back of its highest-ever load factors as Aussies continued their passion for travel despite higher airfares.

Revenue was A$9.90 billion.

The result is a dramatic A$2.7 billion reversal on the loss of A$1.27 billion for the year-ago period.

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KEY POINTS

The result comes after three years and A$7 billion in statutory losses due to the pandemic and the Statutory Profit After Tax was A$1.0 billion.

The airlines said that the drivers of this result were consistently strong travel demand, higher yields and cost improvements from the Group’s A$1 billion recovery program that is nearing completion.

Qantas said that the strong financial position means the Group can reinvest, particularly in the fleet and customer experience, as well as rewarding employees and shareholders.

Qantas Group CEO Alan Joyce said: “This is a huge turnaround considering the massive losses we were facing just 12 months ago.

“When we restructured the business at the start of COVID, it was to make sure we could bounce back quickly when travel returned. That’s effectively what’s happened, but it’s the strength of the demand that has driven such a strong result.

“Fares have risen because of higher fuel costs, but also because supply chain and resourcing issues meant capacity hasn’t kept up with demand. Now those challenges are starting to unwind, we can add more capacity and that will put downward pressure on fares.

“In terms of overheads, we expect the costs we’re carrying from the extra operational buffer will start unwinding from this half and into next financial year.

“Our people have been absolutely central to our recovery and that’s why we’re so pleased to be in a position to reward them with up to $11,500 in cash and shares, and why we’ve given them another $500 staff travel credit today.

“Returning to profit means we can get back to reinvesting for our customers, which is clear from the network, fleet and lounge announcements we’ve made, and from the Project Sunrise cabins we’re previewing. Importantly for our investors, this also sets us up to deliver long-term shareholder value,” added Mr Joyce.

Group Domestic delivered Underlying EBIT of A$915 million, with flying increasing from 86 per cent of pre-COVID capacity in 2H22 to 94 per cent during the half. Qantas’ domestic operations delivered A$785 million and Jetstar’s A$130 million, with margins of 22 per cent and 11 per cent respectively.

Group International delivered an Underlying EBIT of A$511 million as capacity almost doubled from 31 per cent of pre-COVID capacity in 2H22 to 60 per cent during the half. Two routes were re-opened and seven new routes were started, which represented a major logistical effort in port readiness and training after a long period of shutdown in most countries.

Qantas Loyalty delivered A$1 billion in revenue and Underlying EBIT of A$220 million for the half, a 73 per cent increase on 1H22, and is on track to reach the top end of the A$425 million to A$450 million range for its full-year target. Key drivers were the rebound in travel combined with growth in partners and products across the Loyalty portfolio.