It may be slightly less profitable and boast a friendlier CEO who says she does “a lot more listening than talking”, but Qantas remains an airline making serious money that could do much more to win back Australians’ hearts.
The $1.25bn pre-tax half yearly profit unveiled on Thursday, while down 13% on the same period last year, was still 40% higher than the last half-year trading period before the pandemic upended travel.
It was enough to put a smile on the face of the new CEO, Vanessa Hudson, for what was her first financial announcement in the top job.
Shareholders will also be buoyed. While profit margins had taken a hit in part due to lowering air fares, the airline is flush with enough cash to announce a $400m share buy-back, representing a great transfer of wealth from customers to shareholders.
Hudson spoke of her focus in the first six months as chief – repairing Qantas’ relationship with the travelling public as well as its own workers.
Customer satisfaction markers had improved, including spending $230m on improvements including better call centre wait times thanks to extra staff. Fares are falling and Qantas is flying about as much as it was pre-Covid.
However, in terms of sweeteners for customers, much of what Qantas announced suggests an airline playing catch up.
Onboard wifi, which customers have come to expect from airlines for much of the past decade, will be retrofitted to the airline’s existing fleet of international aircraft and turned on from the end of this year. It will be free, and with enough bandwidth for every passenger.
The wifi announcement itself is a reminder of another problem at Qantas – its ageing fleet. While it has taken delivery of a steady stream of new aircraft over the past year and announced new orders on Thursday, its fleet remains older than comparable airlines, with ramifications for efficiency and expansion plans.
An offer this week to earn double status credits or frequent flyer points on most bookings may have appealed to some, but it’s unclear how much Qantas’ efforts will woo average economy, price-conscious customers away from cheaper airlines.
In the competitive international market, there is little to capture travellers’ imagination.
Customers wanting to cash in on their loyalty through the airline’s toughest years continue to struggle to secure classic rewards seats.
A cursory search on Qantas’ website for a one way classic rewards economy trip from Sydney to London shows no availability in June, July or August for the most direct QF1 route. However, plenty of seats remain on sale for cash-paying customers during that busy European summer period.
Meanwhile, the much-hyped Project Sunrise, to fly non-stop from Sydney and Melbourne to cities including New York, London and Paris has been delayed again.
Delivery of the A350-1000 ultra long range aircraft needed for the premium flights is now only expected from mid-2026, not late-2025 as first hoped, the airline announced on Thursday.
From a financial perspective, the airline is in a healthy position.
Broker UBS noted that Qantas’s revenue and demand outlook appeared robust. Rating agency Moody’s said it expected Qantas to remain “well-positioned, even if the currently strong outlook for travel demand deteriorates”.
The results show that for all the reputational damage done, Qantas might still be profiting from its past few controversial years, which included constraining capacity and heavy cost cuts. This included a decision to outsource 1,700 ground handler jobs, which was later deemed illegal by the high court.
Future penalties, including any fallout from the competition regulator’s legal action over allegations Qantas advertised and sold tickets for thousands of flights that it had already cancelled in its internal systems, may start to nullify some of the recent financial gains. The watchdog has said it is hoping for at least $250m in fines.
In the meantime, Qantas has flown out of the pandemic faster than most of its rival airlines, with its share price much closer to its pre-pandemic highs than peers like Air New Zealand, which are still languishing.
To this end, Hudson seems to acknowledge there are many more levers Qantas can pull to win back customers’ affection, but it’s unclear if she feels she needs to.
“We know that it’s a journey. We know it will take time, but we are seeing the results,” Hudson said.
