Qantas says underlying profit is ahead of expectations. Photo / File
Qantas says underlying profit is ahead of expectations. Photo / File
Qantas has signalled a bonus worth up to A$11,000 ($11,800) for staff and upgraded its profit forecast for the first half of the current year.
The airline said it remains on track to share the benefits of the recovery with around 20,000 non-executive employees through a A$5000 boost payment andup to 1000 Qantas shares (currently worth around $6000), “subject to key conditions being met.”
The group now expects an underlying profit before tax of between A$1.35 billion and A$1.45b. This is a A$150 million increase to the profit range given in early October 2022.
In an update, it said consumers continue to put a high priority on travel ahead of other spending categories and there are signs that limits on international capacity are driving more domestic leisure demand, benefiting Australian tourism.
Fuel costs remain significantly elevated compared with the 2019 financial year and are expected to reach approximately A$5b for the full 2023 financial year, a record high for the group despite international capacity at around 30 per cent below pre-Covid levels.
The airline had been hit by a shortage of staff, planes and airport delays but said operational performance has continued to improve, with Qantas ranking as the most on-time domestic airline in Australia in October.
It said it had spent A$200m in rostering additional staff, and continued recruitment and reserve aircraft will help maintain these levels during the latest wave of Covid infections in the community and into the busy Christmas period, as well as limiting the impact of extreme weather (especially wind) in November.
The group’s net debt is now expected to fall to an estimated A$2.3b to A$2.5b by 31 December 2022. This is around A$900m better than expected in the most recent update, due largely to the acceleration of revenue inflows as customers book flights on Qantas, Jetstar and partner airlines into the second half and beyond, as well as deferral of around A$200m of capital expenditure to the second half.
Around 60 per cent of the A$2b in Covid-related travel credits held by the group have now been redeemed by customers. Total credit usage is consistent at a rate of around A$70m a month and new initiatives will be announced shortly to encourage full use of remaining credits over the next year.
While capacity is constrained, more than a million sale fares were launched in October and further sale activity is planned in the weeks ahead. More than five million reward seats are available for frequent flyers over the next year and more Points Planes will be released soon. The group is adding capacity as quickly as possible in the second half of the year while maintaining operational reliability.
Transtasman flights carry about 30 per cent of Queenstown Airports passengers. Photo / Qantas
Of the A$400m share buyback announced in August 2022, 76 per cent is now complete at an average price of $5.66. Low levels of net debt put the board in a position to consider future shareholder returns in February 2023 consistent with the group’s financial framework and phasing of capital expenditure for fleet renewal.
The group recently finalised a three-year agreement with Jetstar pilots as part of its improved pay policy and expects to reach in-principle agreements with others in the coming weeks.
The airline is still embroiled in a legal dispute over outsourcing of ground crew jobs early in the pandemic. It was last week given leave to appeal two Federal court findings that deemed illegal its move to outsource 2000 ground crew jobs during the pandemic.
Singapore Airlines is also benefiting from the strong Australian recovery. Overnight it announced its Airbus A380s will return to Melbourne after almost four years in May next year, while Sydney will get a second daily A380 flight to Singapore from then.
