Qantas has announced a profit after tax of $869 million for the first half of the 2024 financial year, down 13 per cent from the prior corresponding period.
In an ASX announcement on Thursday, it said underlying profit before tax was $1.25 billion, also down 13 per cent, while statutory earnings per share fell 4 per cent to 52 cents.
Commenting on the results that follow a record full-year profit of $2.46 billion profit before tax for FY23, Qantas attributed the reduced revenue to lower fares, which had an approximately $600 million impact on profit while freight yields fell by $146 million.
However, this was mostly offset by contribution from increased flying of $485 million and unwinding of transition costs from the post-COVID restart of $179 million.
In its half-year results, the national carrier also announced an additional on-market share buyback of up to $400 million. This is in addition to the outstanding balance of $48 million from the buyback announced last year.
Net debt rose to $4 billion at the end of December 2023, which Qantas attributed to new aircrafts, and it noted this remains at the bottom of the target range of $4 billion to $5 billion.
According to Qantas, travel demand remained strong last year, with business travel close to pre-COVID levels while leisure continues to lead and fare falling as capacity continues to normalise.
Total flying increased by 25 per cent, it stated, and the group carried 3.3 million more passengers compared to 1H23.
In her first financial report since stepping into the role of chief executive, Qantas Group’s Vanessa Hudson highlighted there was a “lot of work” behind the scenes to lift service levels and having the financial strength to keep investing was key to achieving this.
“That makes the strong performance that all business units had in the first half so important,” Ms Hudson said.
“We understand the need for affordable air travel and fares have fallen more than 10 per cent since peaking in late 2022. At the same time, we’ve seen a cost benefit from fewer cancellations and delays, and scale benefits as more international flying returns.”
Last month, Qantas was singled out by an inquiry into price gouging, with allegations that its price hikes in 2022 may have affected inflation data which sparked a rapid monetary tightening response from the Reserve Bank of Australia (RBA) that year.
The inquiry’s chair, former ACCC chair Allan Fels, highlighted a lack of competition in the aviation industry domestically, which allowed Qantas to reduce its capacity and increase its fares to a level much higher than is considered reasonable.
“Qantas’ ability to reduce supply while increasing prices and suffering no material loss of market share, may have affected CPI [consumer price index] in December 2022,” Mr Fels stated, “and therefore may have impacted the Reserve Bank’s inflation expectations and rate increases.”
However, the airline said the temporary spike in fares post-COVID-19 “reflected reductions in capacity to improve operational resilience following the challenging restart of the industry once borders opened”.
Responding to the allegations, Qantas cited government data that average fares across the industry have declined from their December 2022 peak.
“These reductions coincided with a period of high demand and the imbalance pushed up fares across all airlines. At the same time, fuel prices increased by more than 60 per cent, driving fares higher again,” Qantas said.
