New group chief executive Vanessa Hudson said the airline had heard feedback loud and clear.
She took up the job following the early departure of Alan Joyce following a series of blows to the reputation of the airline, including being found to have sacked workers illegally during the pandemic and being accused of selling tickets for “ghost flights”. Other executives have quit and a board shakeup is underway.
Hudson said there’s a lot of work happening to lift service levels and the early signs are positive.
“Our customer satisfaction scores have bounced back strongly since December and we have more service and product improvements in the pipeline.
“Having the financial strength to keep investing is key, and that makes the strong performance that all business units had in the first half so important.”
She said 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.”
She said staff had been instrumental in the initial recovery.
“The journey we’re on will take time, but the spirit they are bringing is fantastic and it’s made us optimistic about what we can achieve together.”
Staff are being rewarded for performance during the half year, with about 24,000 non-executive employees getting a $500 staff travel voucher to go towards standby fares available to group employees, family and friends.
How Qantas International is doing
Qantas International and Freight, now headed by Kiwi former Air NZ executive Cam Wallace, increased its capacity by 39 per cent in the first half as an additional A380 returned to flying and one new Boeing 787 entered service.
While revenue was up by 14 per cent to $4.3b, underlying earnings plunged by 31 per cent to $322m.
The airline said margin moderation was in line with expectations based on capacity being added and more competition.
The decline in yield and revenue per available seat kilometre (Rask) was largely as expected as pent-up demand moderates and normal seasonality returned,
“All pre-Covid routes have now restarted and new ones were announced, including Perth-Paris. Unit cost declined as economies of scale improved through increased flying,” the airline said.
Qantas domestic increased its flying by 5 per cent in in first half of the year in response to the ongoing recovery in business travel while premium leisure and resource sector demand remained strong.
More flying saw revenue increase by around 3 per cent, however falling fares were a factor in underlying earnings falling by 18 per cent to $641 m.
Some industry overheads, such as airport and security charges, grew above the rate of inflation and there were also higher costs associated with greater investment in customer experience. Transition costs from the post-Covid restart continue to unwind and improved operational performance drove additional efficiency.
Jetstar domestic’s performance improved significantly. Less operational disruption (including resolving supply chain issues) and an increase in flying by 15 per cent saw its underlying earnings increase by 35 per cent to $175m
Qantas Loyalty expanded significantly during the half, adding more members to reach 15.8 million and adding several major programme partners.
The group ended the half with $9.2b of liquidity, including $1.5b in cash, $1.4b in undrawn facilities and $6.3b in unencumbered assets.
Net debt rose to $4b at the end of December 2023 as new aircraft were delivered, the rebuild of forward revenue normalised, $452m of buy-backs were undertaken and bonuses were paid to around 20,000 employees.
The board has approved a return to shareholders of up to $400m in the form of an on-market share buyback. This is in addition to the outstanding balance of $48m from the buy-back announced last year.
In its outlook, it said the group was seeing strong travel demand across the portfolio.
Grant Bradley has been working at the Herald since 1993. He is the Business Herald’s deputy editor and covers aviation and tourism
