Qantas Airways announced an additional share buyback plan of up to A$400 million ($271.36 million) as the Australian flag carrier reported a 16% decline in annual profit due to rising fuel costs and fare normalisation. Qantas expects its fuel costs in the first half of fiscal 2025 to be in line with the year-ago level at A$2.7 billion ($1.83 billion).
Overall earnings reduced compared to last year as fares moderated with the return of market capacity, spending on customer initiatives increased and freight revenue reduced predominantly in the first half. Group Domestic unit revenue provided positive momentum in the second half, increasing on 2H23 levels.
Qantas and Jetstar saw significant improvements in operational performance and customer satisfaction across the year, driven by investments in its operations, enhanced food and beverage, an overhaul of Qantas’ digital platforms and increased availability of frequent flyer seats.
The Group’s fleet renewal continued with 11 new aircraft arriving during the year, including five Jetstar Airbus A321neo Long Range aircraft and two QantasLink A220s, as capital expenditure increased to A$3.1 billion. The new fleet provide improvements in operating cost, network flexibility, passenger comfort and emissions.
As part of recognising the efforts of its people, 23,000 non-executive employees will receive a A$500 staff travel voucher to go towards already heavily discounted standby fares. This is in addition to a A$500 voucher provided to employees in February, bringing the total to $1,000 for the year.
Looking forward, bookings and travel demand remain stable with intention to travel and revenue intake trends remaining positive across all flying brands.
“This result shows the underlying strength of the Group’s integrated portfolio,” said Qantas Group CEO Vanessa Hudson. “Qantas benefited from increased corporate and resources travel and ongoing high demand for international premium seats while Jetstar delivered its highest result as it grew to meet increased demand from price-sensitive leisure travellers and saw the benefits from its new aircraft. The introduction of Classic Plus, with millions of frequent flyer seats, helped drive member engagement and strong earnings for Qantas Loyalty. The investment in operational reliability and customer initiatives delivered a positive improvement in on time performance and customer satisfaction with Qantas ending the year as the most on time major domestic airline. Our strong financial performance and balance sheet will allow us to continue to invest in our largest ever fleet renewal program, which will benefit our customers and people, as well as delivering shareholder returns. These investments come at a time when Australians are continuing to prioritise travel over other spending categories, with intention to travel over the next 12 months remaining high. I want to thank every one of our people for the professionalism, hard work and commitment to delivering for our customers.”
Group Domestic delivered $1,361 million in Underlying earnings with an EBIT margin of 14 per cent, supported by Qantas and Jetstar’s dual brand strategy. Jetstar grew its domestic network by 15 per cent year on year as demand for low fares travel strengthened, while Qantas’ capacity increased by 1 per cent as the continued return of corporate and small business travel more than offset a softening of demand for domestic premium leisure travel.
Growth in resources sector flying continued with charter revenue up 18 per cent on the previous year, with the Group adding three mid-life A319 aircraft to service these customers during the year. Qantas’ on-time performance was particularly strong in the fourth quarter nearing long term averages with 80 per cent of flights departing on time, while 74 percent of Jetstar flights departed on time. This improvement helped drive customer satisfaction with Qantas Domestic’s Net Promoter Score increasing by 24 points.
Qantas’ mishandled baggage reduced by almost a third year on year and is now better than pre-COVID levels. The Group also provided more than 45,000 Bonza and Rex customers with free of charge flights after they ceased operations.
Group International earnings moderated to $755 million Underlying EBIT as the return of global airline capacity put downward pressure on fares and freight yields declined.
The Qantas Group returned to pre-COVID international capacity in May 2024, with the return of more aircraft, including two more A380s. The revenue from this additional flying was offset by an anticipated increase in competitor capacity, which resulted in an 11 per cent reduction in unit revenue, although the decline slowed in the second half.
The performance and popularity of Perth-London, Perth-Rome and since July, Perth-Paris, continue to provide confidence in the launch of non-stop flights to London and New York from Melbourne or Sydney, with the A350- 1000ULR expected to arrive in mid-2026.
Jetstar’s international network saw significant growth and an 11 percent margin for the year. Some of the new A321LR aircraft have been used to grow short haul international routes to destinations like Fiji and Bali, allowing for B787s to be redeployed on long haul routes such as east coast Australia to Japan and South Korea.
Qantas Freight recovered in the second half of FY24 after a challenging first half, with a continuation of the fleet simplification program introducing two A330 and three A321 freighters this year. International freight yields moderated faster than expected but continue to hold more than 150 percent above pre-COVID levels.
The Group is seeing the benefits of the biggest fleet renewal program in its history, with 11 new aircraft arriving over the past year. This will increase again, with 20 new aircraft due to arrive in the coming year, and the return of the remaining two A380s over the next 18 months.
Fifteen Jetstar A321LRs are now operational, with around half of those replacing older A320s, contributing approximately $7 million incremental EBIT per hull through fuel and scale efficiencies.
The first QantasLink A220 started flying in March with three of the new aircraft now operating across the network and receiving positive feedback from customers and crew.
QantasLink announced in June the investment in 14 mid-life Q400 turboprops to gradually replace the smaller Q300 and Q200 aircraft, as part of its ongoing commitment to keeping regional Australia connected.
Aircraft manufacturers (including seat suppliers) are continuing to experience supply chain issues, which are resulting in delays to aircraft deliveries for all airlines. Qantas now expects its first A321XLR to arrive in April 2025.
Preparations for the new aircraft have started with pilot training underway and details of the inflight cabin experience finalised.
The Group is seeing stable travel demand across the portfolio with positive revenue momentum heading into 1H25. Group Domestic unit revenue is expected to increase by 2-4 percent in the first half of the financial year compared to the previous year.
Group International unit revenue is expected to fall 7-10 percent over the same period as market capacity continues to restore however this rate of decline is expected to slow in FY25. This unit revenue is expected to turn positive in the fourth quarter compared to the prior corresponding period. Net freight revenue in 1H25 is expected to be $20-40 million higher compared to the first half of last year.
‘Same job, same pay’ deal reached with FAAA
In December 2023, the Labor Government passed their ‘Same Job Same Pay’ legislation which affects some long-standing workforce arrangements used by Qantas and a number of other businesses across the economy.
Following discussions with the Flight Attendants Association Australia (FAAA), Qantas has confirmed it will support the union’s three Same Job Same Pay applications for its short-haul cabin crew with the Fair Work Commission (FWC).
Separate to these applications, Qantas has also reached an in-principle agreement with the FAAA around its long-haul cabin crew workforce.
Qantas and the FAAA have been in discussions about balancing the impacts of the new legislation on the short-haul and long-haul cabin crew workforces in a way which enables the airline to maintain the best competitive position possible and a sustainable business for the future.
The decision to support the applications will result in up to 800 Qantas short-haul cabin crew soon receiving pay increases, with the final amounts to be worked through as part of ongoing discussions with the FAAA and approval from the FWC.
The in-principle agreement to vary the current Long Haul Cabin Crew Enterprise Agreement for around 2,500 international crew to receive pay increases in line with Qantas short haul crew, also ensures that they have access to the new A350-1000 Ultra Long Range aircraft, including Project Sunrise flights.
Qantas will continue to engage with long-haul cabin crew and their representatives about the proposed changes, which are also subject to an employee vote.
Qantas expects the gross cost impact of the proposed changes in FY25 to be around $60 million, and to commence from 1 November 2024, subject to finalisation with the unions and the Fair Work Commission. Qantas is looking to offset the impact through revenue and cost savings. Importantly, we need to ensure Qantas continues to have a strong, profitable business that can keep reinvesting in new aircraft, which benefits customers and employees, as well as delivering shareholder returns.
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