Qantas has posted a bumper $1.39bn half-year pre-tax profit, fuelled by a 10% uptick in customers.
The airline rewarded shareholders with hundreds of millions in dividend payments out of the windfall.
The airline’s $1.39bn half-year underlying profit, announced on Thursday, is an 11% increase on the same period last year, and was driven by a strong domestic performance, especially from the budget carrier Jetstar, as well as an 18% increase in cash inflows from the airline’s loyalty program.
The chief executive, Vanessa Hudson, praised improved financial strength at Qantas and the continued growth of Jetstar, which has a growing fleet of new aircraft. The low-cost airline attracted more customers during a time of heightened cost-of-living pressures.
“Importantly, Jetstar was able to help more Australians take a holiday for less,” Hudson said.
Jetstar’s earnings across all of its destinations grew 35% over the past year, with domestic growth even stronger at 54%. The budget carrier flew more seats to achieve this, with an 8% uptick in capacity, helped in part by the introduction of eight new aircraft.
Qantas and Jetstar’s strong domestic growth since July 2024 coincided with the collapse of Rex’s domestic jet services between major capitals, as well as the disappearance of Bonza and its regional to regional airport holiday routes from the market, allowing the dominant airline group to further increase its market share.
On Thursday, Hudson said “we were really sad to see Rex go” but insisted Jetstar was 20-30% cheaper than Rex’s airfares on competing routes such as the lucrative golden triangle between Sydney, Melbourne and Brisbane. Rex’s base economy fares, however, included check-in luggage, which Jetstar customers pay extra for.
Capacity was also up on the international routes where Qantas and Jetstar compete with other carriers, with the added supply leading to a 6.6% average reduction in air fares.
Japan has been a popular international market for both airlines, spurred on by the weak yen. Qantas Group’s chief financial officer, Rob Marcolina, said the company paid close attention to the impact of global exchange rates on travel patterns.
Marcolina said as budget travellers more likely to fly Jetstar cooled on its Honolulu routes due to the weak Australian dollar and high hotel costs in the Hawaiian city, the company shifted that capacity into more premium Qantas services. Qantas posted a 2.5% increase in demand for premium cabins across its international routes. And as Australia’s cost-of-living crisis continued, Jetstar customers continued to show interest in Bali.
Qantas released its results hours after the federal treasurer, Jim Chalmers, announced he had granted approval for Qatar Airways to take a 25% stake in Virgin Australia. The change will see Qantas’ domestic rival relaunch long-haul international services – initially through planes and crew leased from the Doha-based carrier – and be able to tap into Qatar’s global network.
Qantas had opposed the Virgin-Qatar deal during government consultations, but on Thursday, Hudson said she was confident her company was up for the challenge.
“I think that having more competition, that actually makes us better,” she said.
Hudson announced the company’s first dividend payment since 2019, with $250m in base dividends, paying 16.5c a share, and $150m in special dividends, paying 9.9c a share – both fully franked.
Qantas has recently sought to build hype around plans for non-stop flights from Sydney and Melbourne to cities such as London, Paris and New York, but the ultra long-haul services were repeatedly delayed following the outbreak of the Covid pandemic.
On Thursday, Hudson confirmed the Project Sunrise flights are only expected to begin flying from 2027.
Reputational recovery ongoing, legal costs grow
Hudson acknowledged that while customer interest had been growing, especially in Jetstar, Qantas was still working to win back the trust of the public after a tumultuous period in which the airline was plagued by legal scandals and complaints about poor customer service, delays and cancellations.
“We’re seeing progress from the investments we are making for our customers and people but we know there’s more work to do to consistently deliver in the moments that matter,” Hudson said.
The sagas have also hit Qantas’ finances. However, a $120m penalty and compensation settlement with the consumer watchdog over selling thousands of tickets to already-cancelled flights, as well as the costs of a years-long legal battle over illegally outsourcing ground handlers – which has so far included $120m in compensation payments, do not appear to have seriously dented the airline’s bottom line.
Financial forecasts released Thursday show the airline increased its cost provision for the ground handler outsourcing matter by an additional $65m, as a court ruling on penalties for the behaviour is expected at some point this year.
Qantas – which has long been criticised for employing staff on an array of different enterprise deals – also criticised the federal government’s same-job, same-pay legislation, which it said added about $65m to its wages bill in the 2024-25 financial year.
The airline said it expects to spend $5.22bn on fuel over the financial year.
Its net debt remained at $4.1bn at the end of December, in line with its previous expectations.
