Australia’s Qantas Group saw a decline in its full-year earnings, amid moderating passenger yields and higher spending to improve its reputation.
For the year ended 30 June, the airline group – comprising mainline operator Qantas and low-cost unit Jetstar – reported an underlying pre-tax profit of A$2.08 billion ($1.4 billion), down 16% against its record profit in the year-ago period.
The group’s statutory profit after tax stood at A$1.25 billion, a 28% drop year on year. The airline had increased its spending in areas such as food and beverage, digital initiatives, as well as airport lounges.
While Qantas saw its full-year earnings decrease on both international and domestic fronts, low-cost operator Jetstar reported a record full-year EBIT, suggesting that leisure travel demand remains strong.
Qantas flagged the “downward pressure on fares” on its international network, as global airline capacity was restored post-pandemic.
Its international passenger business saw a 39% decline in underlying EBIT for the full year, despite achieving a 12% rise in revenues, as the airline returned to pre-pandemic capacity in May.
“The revenue from this additional flying was offset by an anticipated increase in competitor capacity, which resulted in an 11% reduction in unit revenue, although the decline slowed in the second half,” the airline states.
On the other hand, Jetstar saw its international earnings improve 21% year on year, as it expanded its international network with the arrival of new Airbus A321LRs. The new narrowbodies have helped “deliver profitable growth”, allowing Jetstar to better redeploy its Boeing 787s across its network.
On the domestic front, Qantas reported a 16% decline underlying EBIT, on the back of a 4% rise in revenues. It attributes the decline to “customer investments, new aircraft entry-into-service and industry costs”.
During the fiscal year Qantas took delivery of its first A220s – which replace its fleet of aging Boeing 717s – incurring training and system costs.
In its outlook, the group says travel demand remains stable, with “positive revenue momentum” heading into the end of the year. While international yields are expected to continue to drop – by as much as 10% – Qantas expects it to slow in the current fiscal year, which ends 30 June 2025.
Airline chief Vanessa Hudson says: “This result shows the underlying strength of the Group’s integrated portfolio. 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 travellers and saw the benefits from its new aircraft.”
