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Qantas returns to profit but warns on lower fares

Australian carrier also unveils A$500m share buyback programme as it reports A$2.4bn cut in net debt

Qantas chief executive Alan Joyce: shares fell as the airline flagged higher-than-expected spending on planes to cope with the rapid rebound in passenger growth. Photograph: Brendon Thorne/Bloomberg

Thu Feb 23 2023 - 16:34

Qantas, Australia’s flag carrier, has said it expects strong travel demand over the next two years after returning to profit for the first time since the onset of the pandemic.

The airline, known as the “flying kangaroo”, said underlying profit before tax for the six months to December hit 1.4 billion Australian dollars (€8999 million), which reversed a A$1.3 billion loss in the comparable period.

Qantas accumulated losses of A$7 billion during the pandemic, when lockdowns to limit the spread of Covid-19 – including the closure of international and state borders in Australia – left it just weeks away from bankruptcy.

The airline, which unveiled a A$500 million share buyback, has been blighted by a collapse in customer service levels over the past year, which caused chaos at Australian airports and on some international flights. The airline said it had invested A$200 million to address those issues having been criticised by unions and the public for cutting staff numbers too heavily during the pandemic.

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Alan Joyce, the Dublin-born chief executive of Qantas, said: “This is a huge turnaround considering the massive losses we were facing 12 months ago.” He added that airline fares should start to decline after higher fuel costs and reduced capacity drove prices higher in 2022.

Net debt has been reduced to A$2.4 billion as the airline has continued to strengthen its balance sheet. Shares in Qantas, which have risen by a quarter over the past year, dropped 6.8 per cent on Thursday.

Qantas said it was facing delays of up to six months in new aircraft deliveries from Airbus alongside other airlines around the world. The Australian carrier said it would bolster its fleet by acquiring some older Airbus planes and exercising nine options for A220 purchases to help meet travel demand growth. – Copyright The Financial Times Limited 2023/Bloomberg

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