Qantas Airways reported a 14% decline in underlying profit before tax for the year ended June 30, with earnings totaling A$2.06 billion ($1.48 billion), slightly above market expectations of A$2.00 billion.
The airline’s second-half earnings were reduced by A$420 million due to elevated fuel costs stemming from the Middle East conflict. Qantas now expects its fuel bill to increase by A$1 billion in the current half compared with the prior year, despite hedging 85% of its fuel requirements. As a result, the previously announced A$150 million share buyback program, unveiled in February but suspended amid geopolitical tensions, has been canceled.
Qantas declared a final dividend of 19.8 Australian cents per share. The carrier also outlined plans to accelerate the retirement of its Airbus A380 fleet, with retirements beginning in 2028—about four years earlier than previously planned. The airline is in discussions with Airbus and Boeing to convert 20 aircraft options into firm orders for A350s and 787s starting in 2030, separate from its Project Sunrise initiative.
Project Sunrise, which aims to launch non-stop flights from Sydney to London and New York, will rely on a fleet of 12 long-range A350-1000 aircraft, with deliveries expected to commence next year. Qantas expects total revenue per seat flown to rise between 8% and 10% in the first half of the current fiscal year, outpacing Visible Alpha consensus estimates. Domestic capacity is projected to decline 3% in the period, while international capacity is forecast to increase 2%.
Qantas shares rose as much as 5.1% following the announcement. The company’s CEO, Vanessa Hudson, cited rising maintenance and disruption costs for the A380s as a key factor in the accelerated retirement timeline. She described the past year as marked by "two very different operating environments."
Jetstar, Qantas’s low-cost subsidiary, reported record weekly passenger intake, according to CEO Stephanie Tully. Analysts at Jefferies noted that Qantas delivered resilient earnings, maintained balance sheet strength, continued returning capital to shareholders, and provided a constructive outlook.
