Key Highlights:
- First half trading in line with expectations across Qantas and Jetstar, with strong performance in both domestic and international segments.
- Jetstar Domestic shows better-than-expected unit revenue, driven by stronger travel demand.
- Qantas Domestic sees improvements in load factors and corporate travel demand, continuing to strengthen year on year.
- Group Domestic RASK expected to increase by 3-5% in FY25, while Group International RASK is still expected to fall by 7-10%.
- Qantas Loyalty on track for 10% Underlying EBIT growth in FY25 despite a short-term impact from Classic Plus Flight Rewards launch.
- Fuel cost estimates for the first half of FY25 are around $2.55 billion, with hedging strategies in place to mitigate volatility.
- Qantas announces a $28 million thank you payment for 27,000 employees, recognising their contributions over the past year.
- $400 million share buy-back is approximately 45% complete, on track to finish by 31 December 2024.
Sydney, Australia – 25 October 2024 – The Qantas Group has provided an update on its performance for the first half of FY25, with trading in line with expectations. Both Qantas and Jetstar continue to show strength across their respective segments, with particularly strong demand in Jetstar Domestic.
Domestic Performance: Stronger-than-Expected
Jetstar Domestic is outperforming previous expectations, particularly due to an unexpected surge in travel demand. This is resulting in better unit revenues, as the airline sees a solid start to the financial year. On the other hand, Qantas Domestic is benefitting from improving corporate travel demand, alongside solid load factors, signaling a continued recovery.
The Group is now expecting Domestic RASK (Revenue per Available Seat Kilometer) to increase by 3-5% in the first half of FY25, compared to the same period in FY24. This is a slightly more optimistic forecast than earlier predictions.
International Outlook: Some Headwinds Remain
For Group International RASK, expectations remain consistent with prior guidance, and the Group still anticipates a fall of between 7-10% in the first half of FY25, compared to FY24. This decline continues to reflect geopolitical volatility and fuel price pressures.
Qantas Loyalty: On Track for Growth
The Qantas Loyalty program is continuing to perform strongly, with ongoing growth driven by the recent Classic Plus Flight Rewards launch. However, as anticipated, the program is expected to see lower earnings in the first half of FY25 due to the fair value impact of the new rewards initiative. Despite this, the business is still forecasting at least 10% Underlying EBIT growth for FY25.
Fuel and Hedging: Navigating Volatility
Geopolitical events continue to inject uncertainty into fuel prices, with the Group acknowledging that fuel cost volatility could impact the business. With current prices, the fuel cost for the first half of FY25 is estimated to be around $2.55 billion, including hedging and carbon costs. Qantas remains committed to disciplined hedging strategies, ensuring protection against rising fuel costs while benefiting if prices fall.
Employee Recognition: $28 Million Payment
In recognition of the hard work and dedication of its staff, the Qantas Group has announced a $28 million thank you payment to be shared by approximately 27,000 employees. This is a testament to the company’s commitment to its workforce, acknowledging their significant contributions over the past year.
Share Buy-Backs: Progress and Completion Expected
As part of its capital management strategy, Qantas is progressing with its $400 million on-market share buy-back announced with the FY24 results. The buy-back is now approximately 45% complete, with shares being repurchased at an average price of $7.23. The Group remains on track to complete the buy-back by 31 December 2024. Additionally, the $31 million buy-back announced in FY24’s first half has now been completed.
